Market Comment – In the Spotlight & Results (ΔΕΗ, ΜΟΗ, ΠΛΑΙΣ)+ Preview (KRI)

ΜΑΝΟΣ ΧΑΤΖΗΔΑΚΗΣ 
ΤΕΤΑΡΤΗ 21 ΜΑΙΟΥ 2021 

¢     Market Comment

Stocks ended marginally higher, as Piraeus’ sharp losses did not leave room for any considerable upside. Other banks and a number of large caps reversed the drop before closing time, with the late rally taking daily trading closer to the 100-million-euro mark.

General index ended at 76.76 points, adding 0.11% to Monday’s 875.76 points. The large-cap FTSE 25 index expanded 0.36% to close at 2,125.04 points.  Banks managed to rebound from Piraeus’ spill-over effect on Monday, with Eurobank adding 5.7%, Alpha +3.2% while banks index advanced 2.80%Among the other blue chips, Sarantis parted with 1.68%, Fourlis lost 1.58%, Terna Energy gave up 1.13% and OTE Telecom was down 1.08%. EYDAP and Jumbo improved 0.58%. In total 61 stocks posted gains, 61 registered losses and 53 remained unchanged. Turnover amounted to €94.8m, up from Monday’s €70.5m thanks to block trades.

AthEx Energy forums kicks off today, Piraeus book building starts while results announcements and conference calls shape the day. Negative sentiment in foreign markets will weight in today’s trend.

¢    In the Spotlight

Greece/F&B: Accommodation and food and beverage services businesses were being hit hardest by the lockdown restrictions in February, as their revenues dropped 69% and 55% y-o-y respectively, available monthly data from the National Statistics Service of ELSTAT showed. Revenues from accommodation amounted to €24.6mn while the food and beverages sector registered €51.7mn in turnover

  • Greece/Economy: Greece is expected to return to positive growth rate of between 3.5% to 4% this year, the Foundation of Economic and Industrial Research of IOBE said. The think tank’s baseline scenario assumes a gradual retreat of the heath crisis, with most of lockdown restrictions to be lifted after mid-May and a satisfactory absorption of the Recovery Fund money. However, under a stressed scenario, IOBE said in its quarterly review that GDP growth will not exceed 2%. The adverse scenario involves longer period of the health crisis, which will impact the tourism season and delays in the absorption of EU aid money. Unemployment is seen ranging between 15.5 and 16%.

Greece/Current Account Balance: Current account balance showed a deficit of €840mn in February, shrinking €314mn y-o-y due to an improvement in the balance of goods and the primary income account, Bank of Greece said. Exports increased more than imports due to values changes of oil exports and imports.  Total exports of goods rose by 9.5% at current prices while import prices were up 5.1%. February services surplus dropped to €230mn against €387mn in February 2020 due, reflecting a deterioration in all its main components. The travel balance reached just €15.8mn, as receipts declined by 89%, reflecting an 88% drop in arrivals. In the January-February period, the current account showed a deficit of €1.3bn, down by €1.2bn y-o-y.

Banking Sector: Greek banks’ dependence on Eurosystem funding, entirely though ECB’s Long-term Refinancing Operations (LTROs), stood at €41.5bn in February, up €230mn m-o-m, ECB data showed. Local lenders’ dependence on ELA funding came in almost zero.

PIRAEUS BANK: Share capital increase through a book building process commences today and will conclude this Friday. Price range set between €1-€1.15/share with the issue of 1.2bn new shares. 85% of the issue will be allocated to foreign investors whereas a15% to domestic private investors. HFSF stake will drop from 61.34% to 27%-33% (€350mn to €440mn SCI participation) while cornerstone investors include Paulson and Co (€265mn SCI contribution ending with an 18.62% stake from 4.61%), Helicon Investments (€75mn with a 5.22% stake) and Mr Mystakides (€40mn from 2.9% to 3.04%). Old private shareholders will maintain their 1.25% stake in the bank while other new investors will recommend a 39.02% stake.

FOOD Sector: CVC Capital agreed to acquire DODONI Dairy Products following recent acquisition ov Vivartia from MIG GROUP with an implied multiple of 9-10x EV/EBITDA and a total EV of €130-€150mn.

Plaisio (FY:20 results): Plaisio posted a solid set of results posting record level sales assisted by IT/hardware and new “White Appliances” segment. As a result, IT EBITDA mitigated Telecom softness supporting Group EBITDA staying flat y-o-y at €13.3m. We note however that margin erosion is witnessed across the board, potentially as a result of increased e-sales that come at a discount. Newly introduced “White Appliances” segment did pretty well delivering €24.5m of sales on its first full year of operation. Finally, net income stood at €3.1m posting a rise of 59.7% y-o-y.  Despite the challenges Plaisio liquidity increased massively with net debt position (incl. leases) returning back to negative (-2.9m) with total cash at €58.5m, almost 70% of its current market cap.

Dividend proposal at 0.05 eur/share vs. 0.02 eur/share a year ago, ex-date on June 22, payment starts June 29. The company also announced a presentation of FY:20 results via teleconference to analysts on May 11.

The following table summarise segmental breakdown: 

FY:20

Office

IT

Telecom

White Appliances

Group

Sales

             102,261  

        160,891  

               66,612  

    24,481  

             354,245  

Y-o-Y (%)

-0.2%

15.6%

1.5%

146.5%

11.7%

EBITDA

                 5,475  

            4,871  

                 1,981  

         980  

               13,307  

Y-o-Y (%)

-12.0%

11.7%

-18.3%

75.9%

-1.9%

Margin (%)

5.35%

3.03%

2.97%

4.00%

3.76%

(+/-)

-72 bps

-11 bps

-72 bps

-161 bps

-52 bps

EBIT

                 2,267  

            2,017  

                   820  

         406  

                 5,510  

Y-o-Y (%)

-14.7%

9.4%

-20.0%

72.8%

-4.4%

Margin (%)

2.22%

1.25%

1.23%

1.66%

1.56%

(+/-)

-38 bps

-7 bps

-33 bps

-71 bps

-26 bps

Net Earnings

 

 

 

 

3,109

Y-o-Y (%)

 

 

 

 

+59.7%

Margin (%)

 

 

 

 

0.9%

(+/-)

 

 

 

 

+26bps

 

Motor Oil (FY/Q4:20 review): MOH announced a particularly weak set of results on disappointing refinery performance. This is the first quarter in many years of series of considerable outperformance of the group that misses by a large the consensus. Still the year was lost from Q2:20, when refining environment saw multi year lows and divergence in crude oils pointed to an even narrow margin. No surprise the company said that is not going to distribute any dividends in 2020. In more details:

§   Group turnover reached €6,120.4m vs. €9,372.5 million in 2019 which represents a decrease of 34.70%. This development is attributed to the decrease of the average prices of petroleum products (denominated in US Dollars) by 37.08%, the strengthening of euro against the US Dollar (average parity) by 2.03% and the drop of the sales volume by 10,12%. Domestic market demand in 2020 dropped to MT 10.4 million, which is the lowest level since the listing of the Company on the Athens Exchange in 2001. The products which largely account for this development in 2020 were the aviation fuels, the total demand of which decreased by 858 MT thousand (decrease by 59.56%) because of the large reduction in tourist arrivals due to COVID-19, the fuel oil whose total demand decreased by 1,136 thousand MT (decrease by 30.86%).

§   In Q4:20 volumes were up by 1.3% yet sales saw a sharp decline by 29.8% courtesy of the unfavorable refinery environment. Despite that, exports hit record levels of 80.4%.

§   In Q4:20 refinery EBITDA came significant lower at just €10m. Yet marketing and subsidiaries posted a strong €24m (+17.6%) EBITDA coming ahead of our estimate. On a reported level EBITDA stood at €49m (€15m of inventory gains). On a full year basis FY:20 reported EBITDA came at €86m on the back of € 245m of inventory losses and reported net losses at €111m.

§   Below EBITDA MOH posted financial expenses of €79.4m vs. €35.8m a year ago, the increase is attributed from €32.4m derivatives accounted at FVPL. Note also that the group also booked impairments of €5.2m related to non-core subsidiaries.

§   CapEx in 2020 for the parent company stood at €175m while is estimated at €240m for 2021 -the highest since 2004- which mostly relates to new Naftha upgrade plant .

§   Net debt at end 2020 stood at 920.8 vs. €354.3m a year ago.

§   In the conference call we expect fresh outlook on refinery environment, RES rollout and some color on refinery upgrade CapEx.

§   In other news on April 19 the company bought 4,000 shares at €13.27/share for a total consideration of €53.08K. Treasury stock reached 272,227 shares or 0.25% of share capital.

§   AGM on June 16.

The following table summarise results vs our estimates:

Motor oil

2019

2020

Y-o-Y

2020 (E)

Vs

2019

2020

Y-o-Y

2020 (E)

Vs

EUR mn.

FY

FY

(%)

FY

Estimate

Q4

Q4

(%)

Q4

Estimate

Volumes (MTx1000)

14,152.0

12,649.0

-10.6%

12,600

0.4%

3,503

3,549

1.3%

3,500

1.4%

Sales

9,520.0

6,120.0

-35.7%

7,012

-12.7%

2,347.0

1,648.0

-29.8%

2,540

-35.1%

EBITDA

495.0

86.0

-82.6%

107

-19.6%

60.0

49.0

-18.3%

70.0

-30.0%

Adjusted EBITDA

453.0

331.0

-26.9%

357

-7.3%

78.0

34.0

-56.4%

60.0

-43.3%

of Which Refining

339.0

198.0

-41.6%

232.0

-14.7%

57.6

10.0

-82.6%

44.0

-77.3%

of which Marketing & other

114.0

133.0

16.7%

125.0

6.4%

20.4

24.0

17.6%

16.0

50.0%

Net Income

228.0

-111.2

-148.8%

-90

23.4%

20.0

-5.0

-125.0%

16.1

-131.1%

Adjusted Net Income

212.0

75.0

-64.6%

105

-28.4%

32.0

-16.0

-150.0%

14

-217.0%

Conference call (21/04 GR-Time 17:30)

§   GR          +30 213 009 6000 or +30 210 946 0800

§   UK          +44 (0) 800 368 1063

§   US          +1 516 447 5632


PPC (Q4/FY:20 review): PPC announced a satisfactory set of results which affected by increased provisions. Surprise came from FCF which once again assisted in net debt reduction. In more details:

§   Turnover decreased by €282.3m or 5.7% due to lower sales volume by 5,557GWh or by 14.5% as a result of market share loss (7.1%) and domestic demand reduction (by 6.7%).

§   Liquid fuel expense decreased by 31.1% to €462.5 m in 2020 from €670.9m in 2019 due to lower electricity generation from liquid fuel as well as lower prices for heavy fuel oil and diesel.

§   Natural gas expense significantly decreased by 30.9%to€297.9m from €431.4m due to the reduction of natural gas price, despite the aforementioned increase of the corresponding generation.

§   Energy purchases expense from the System (mainland) and the Network (non- interconnected islands) excluding the NOME impact and the one-off charge of electricity suppliers for RES account, decreased by €373.2 m due to the reduction of the Market Clearing Price-MCP from €63.8/MWh in 2019 to €45.1/MWh in 2020, as well as due to lower energy purchases volume.

§   Expenditure for CO2 emission rights decreased to €393.5m in 2020 from €546.5m in 2019 driven by volume reduction from 23.1m tones to 15.5m tones which was partially offset by the increase of the CA emission rights average price from €23.7/tn to €25.6/tn.

§   Total payroll cost including capitalized expense decreased by€82.2 m. to €734.8m in 2020 from €817m in 2019

§   EBITDA was positively impacted by the rebate of €44.8m due to the revision of the natural gas procurement cost of DEPA by BOTAS for the years 2012-2019, following the decision taken by the International Arbitration Court, with respect to the dispute between the two companies. On the other hand, there was a negative impact by the provision for personnel’s severance payment of €35.8m as well as from the one-off charges of a total amount of €74.3 m, as part of the measures taken by the Greek state in order to cover the Special RES account deficit pursuant to Law 4759/2020 (€72.9m from the charge of €2/MWh on the quantities of PPC’s load declarations in the day ahead market and for Non Interconnected Islands for 2020 and II. 4m from the contribution of RES & COGEN generators corresponding to 6% of the electricity sold by power plants which have been put into operation until 31.12.2015).

§   Likewise, 2019 EBITDA had been positively impacted by the €243.4m reduction of the liability for post-retirement benefits, the rebate of €99.3m from the surplus of the Special RES Account as well as the settlement of PSOs for previous years of a total amount of €122.6m (collection of €194.7 million for the period 2007-2011 and charge of €72.1 million for 2017). Including the abovementioned one-off items, EBITDA for 2020 amounted to €820.5m compared to €798.9m in 2019. Other provisions for materials stood at €130.1m in 2020 vs. €37.1m in 2019.

§   FY:20 recurring EBITDA stood at €885.8m, with the respective margin at 19.1%, compared to €333.6m last year. On a quarterly basis Q4:20 clean EBITDA came lower by 20% y-o-y at €190m on tough comps as tariff hikes were enacted on September 2019, while fuel, wholesale electricity (SMP) and CO2 prices rebounded towards year-end.

§   Further down, FY:20 net income came positive at €35m vs. losses of €1.6bn in 2019.

§   More importantly PPC managed to reduce net debt to €3.28bn vs €3.69bn a year ago (€3.41bn in 9M:20) courtesy of lower capex by c€200m and €605.5m FCF generation vs €214.2m a year ago.

§   In the conference call management said that expects a similar year for 2021, while new Ptolemaida V energy plant will be converted to a 1GW CCGT natural gas station.

Overall PPC posted a satisfactory set for FY:20, achieving a remarkable turnaround in terms of bottom line and liquidity. Increased provisioning will assist in 2021 to overcome CO2 and liquid fuels increasing costs.  Remains a “buy” as HEDNO stake sale will unveil value while transition to a “cleaner” energy generation excuse higher multiples. In our view guidance is a bit cautious taking into account that energy demand will normalize gradually in 2021 as economic activity resumes. PPC trades at 13.7x 2021 PE and 5.2x EV/EBITDA.

The following table summarise reported results vs estimates: 

PPC

2019

2020

Y-o-Y

2020

Act. vs

2019

2020

Y-o-Y

2020

Act. vs

EUR m.

FY

FY

(%)

FY Est.

Est.

Q4

Q4

(%)

Q4 Est.

Est.

Sales

4,931.6

4,649.3

-5.7%

4,695.7

-1.0%

1,323.5

1,129.2

-14.7%

1,175.6

-3.9%

EBITDA

798.9

820.5

2.7%

940.5

-12.8%

602.7

112.2

-81.4%

232.2

-51.7%

EBITDA Mrg

16.2%

17.6%

+145 bps

20.0%

-238 bps

45.5%

9.9%

-3,560 bps

19.7%

-981 bps

Net Income

-1,685.8

35.2

102.1%

45.92

-23.3%

-1,332.6

22.4

101.7%

33.1

-32.4%

Net Mrg

-34.2%

0.8%

+3,494 bps

1.0%

-22 bps

-100.7%

2.0%

+10,267 bps

2.8%

-83 bps

 

KRI KRI (Q4/FY:20 preview): The company is expected to report Q4/FY:20 results today after market close. We expect a strong finish for the year driven by MS gains in the domestic yogurt market, continuous strong demand of yogurt in the international front (UK) and weak ice cream performance both domestically and abroad amid lockdown measures and mobility restrictions impacting impulse consumption. In more details:

§   FY:20 sales are seen growing 9.7% to €123.86mn on strong yogurt execution both in Greece and Internationally. Greek Yogurt sales are estimated to end 10% higher to €48.71mn and International Yogurt sales to reach 48.9mn up by 20.5% on strong UK PL expansion, new deals in Italy and Central Europe (with retailers). Ice cream performance will be impacted by the covid 19 outburst limiting tourism and impulse consumption on the streets. Greek ice cream sales are seen down by 4% to €20.83mn wheras international ice cream sales, still a small figure in consolidated sales contribution, are estimated to drop 20% to €5.1mn.

§   EBITDA is expected to come in 8.5% higher to €22.92mn on flat EBITDA margin as Q4 kickbacks and rebates coupled with lower PL gross margin, yet accompanied by lower selling and distribution expenses, will take their toll on EBITDA margin front.

§   Finally, net income is seen rising 5.5% to €15.84mn on €4mn depreciation charges and 15% effective tax rate as the company will benefit from investments grants regime on past its ongoing investment plan.

§   We expect KRI KRI to distribute a FY:20 dividend of €0.18/share implying a DY of 2.4% based on yesterday’s close.

§   The company trades at a projected FY:21 PE 13x, EV / EBITDA 8x and DY 3.2%. It remains on an OVERWEIGHT recommendation.

The following table summarizes KRI KRI FY:20 financial performance based on our estimates:

 

KRI KRI

2019

2020

Y-o-Y

2019

2020

Y-o-Y

EUR thous.

FY

FY

(%)

Q4

Q4

(%)

Sales

112,903

123,860

9.7%

19,962

21,111

5.8%

EBITDA

21,120

22,920

8.5%

3,648

4,251

16.5%

EBITDA Mrg

18.7%

18.5%

-20 bps

18.3%

20.1%

+186 bps

Net Income

15,015

15,840

5.5%

2,568

1,811

-29.5%

Net Mrg

13.3%

12.8%

-51 bps

12.9% 

8.6% 

-429 bps 

 

ENTERSOFT: The company will publish FY:20 financial results tomorrow Thursday April 22. AGM on June 3. Ex-dividend date June 16. Dividend payment June 22.

ELLAKTOR: Major shareholders Mr. Kaymenakis and Mr Bakis have applied for restrictive measures regarding January 2021 decisions on new management and the €120.5mn company’s share capital increase.

GEKTERNA: On April 16, Mr. Peristeris stake to the company rose to 29.7542% from 27.1643% previously. Reggerborgh’s stake dropped below the 5% threshold. On April 19, the company bought 17,858 shares at €9.5857/share for a total consideration of €171.182K.

CENERGY: AGM on May 25. 

MYTILINEOS: On April 19, the company bought 15,000 shares at €14.4480/share for a total consideration of €216.720K. Total treasury reached 4.6486% of share capital or 6,642,392 shares.

PROFILE: On April 16 and April 19 the company bought 3,000 shares for a total consideration of €15.332K (€5.1107/share).