Bank stocks assisted index recovery on Tuesday, with the benchmark ending up near the day’s high as the closing auctions boosted prices. The market has now turned its attention to the corporate results issued this week, as well as the reopening of the 10-year sovereign bond, which could take place today.
General index general index ended at 639.60 points, adding 0.89% to Monday’s 633.98 points. Banks index improved 2.04%, as Alpha outperformed with a 4.04% rise. Piraeus increased 2.32%, National earned 1.62% and Eurobank collected 0.70%. OPAP jumped 3.71%, Public Power Corporation (PPC) and Athens Water (EYDAP) climbed 1.90%, Hellenic Petroleum and Piraeus Port Authority rose 1.76% and Motor Oil grabbed 1.70%. Aegean Air eased 0.97% and Lamda Development parted with 0.89%. In total 63 stocks posted gains, 27 saw losses and 21 remained unchanged. Turnover amounted to just €35.4m, down from Monday’s €60.1m.
We expect a moderate rise in today’s session and selective interest related to H1/Q2:20 result announcements.
Greece/GDP: Hellenic Statistical Authority announced that the press release “Quarterly National Accounts 2nd quarter 2020 (provisional data)”, scheduled for September 4, 2020, will be published on the 3rd of September 2020.
Greece/Tourism: Reportedly Arrivals, both domestic and international, at most Greek airports dropped between 55% and 60% in August, according to preliminary data. This contraction is not as bad as July’s, and actually exceeded operators’ expectations. The fact remains, however, that the slump in international arrivals was significantly higher than that in domestic arrivals. And it is international travelers that bring in the most revenue, not just to airports, but across all tourist activities. At Athens International Airport, August arrivals were down 60% on the same month last year. International arrivals declined 66% and domestic arrivals 47%.
In July, traffic at the largest 14 Greek airports outside Athens had slumped 75.1%, to 1.3 million, from 5.3 million in 2019. International arrivals were off 78.5% and their domestic counterparts 56.5%. Athens Airport arrivals fell 70%, to 894,000.
Greece/PMI: Greece’s factory activity showed a further, albeit slight, deterioration in operating conditions across the Greek manufacturing sector, IHS Markit said. The slower overall decline largely stemmed from softer contractions in output and new orders, as well as a return to growth of employment amid a pick-up in business confidence to a six-month high. However, Markit noted that “new business fell at a solid rate amid historically weak client demand following the coronavirus disease 2019 (COVID-19) pandemic’s outbreak. Meanwhile, cost pressures grew, with input prices rising at the sharpest rate for seven months.” Markit’s PMI for manufacturing stood at 49.4 in August, below 50.0 no-change threshold, and up from 48.6 in July.
Greece/PDMA: Greece mandates six international banks to manage the reopening of the 10-year bond issue, which is seen taking place today. The country will raise additional €1-€2bn.
Motor Oil: The company will announce H1/Q2:20 results today after market hours. Consensus forecast adj. EBITDA of €76m (-27.7% y-o-y) and net profits of 22m (-49.8% y-o-y) which reflect the adverse refining and economic environment in Q2:20 when lockdowns took place. A conference call will follow tomorrow after market.
PIRAEUS BANK: Piraeus Bank said it has signed a binding commitment letter with Intrum for the sale of 30% of the mezzanine and junior notes of the €1.9bn residential mortgage NPE securitization, known as Phoenix. Piraeus plans to distribute 65% of the mezzanine and junior notes to its shareholders and retain 5% of both notes. “Upon completion of the Bank’s corporate transformation underway (hive-down) the new licensed banking entity will retain one hundred percent (100%) of the senior notes and five percent (5%) of the mezzanine and junior notes,” Piraeus said in a bourse filing. Recall, Piraeus Bank has applied for opting in to the Hercules Asset Protection Scheme for the Phoenix securitizations. The application relates to the provision of a guarantee by the state on the senior notes of an amount up to €1bn.
AEGEAN AIR: The company rescheduled its Q2/H1’20 financial results announcement for September 28th prior to market opening.
TERNA ENERGY: Extraordinary GM cleared the increase of the share capital of the Company by the amount of €1.8mn by cash payment, with the issuance of 6,229,422 common shares with voting rights and a nominal value of €0.30 each, with the option of partial subscription, with the elimination of the current Shareholders’ pre-emptive rights and the disposal of the new shares in funds managed by the following international investors and/or companies affiliated with them: Blackrock Inc., Anavio Capital Partners LLP, Kayne Anderson Capital Advisors LP, and Impax Asset Management, at a price of €11 per new share, whereas the difference between the nominal value and the disposal price, amounting to €66,654,815.4, shall be placed at a special share premium reserve.
In the H1:20 period the group posted €25.1m net profit affected by one offs related to US operations. EBITDA was strong at108.4m up 22.2% y-o-y.
PETROPOULOS: On September 1st, the company bought 6,350 own shares at €4.48/share for a total consideration of €28.5K.
Eurobank (Q2:20 Results review): Eurobank reported a satisfactory set of results posting an 82% annual rise in its adjusted first half profits to €176m. On a reported basis, the net result was negative 1.17 billion euros and includes a total loss from Cairo and FPS transaction of 1.33 billion euros. Management confirmed guidance for 840m PPI and 140-160 bps CoR in 2020. In more details:
§ Core pre-provision income increased 8% y-o-y to 435 million euros and 5.8% q-o-q to 224 million euros. Net Interest Income rose 0.6% to 689 million euros. Fee and commission income was up 16% to 180 million euros.
§ Loan loss provisions decreased 22% in the first half, amounting to 271 million euros.
§ Provisions over NPEs increased by 610 basis points y-o-y to 60.6%, accounting for the Cairo completion.
§ The NPE ratio, post Cairo, decreased by 17.5 percentage points y-o-y to 15.3%, the lowest level among Greek banks, Eurobank said. The NPE formation was negative by 77 million euros in the second quarter.
§ Also, Eurobank said that moratoria for performing clients amounted to 5 billion euros in Greece and 2.3 billion euros in international operations, while performing loans grew by 1.3 billion euros compared to the end of 2019. The bank said that does not expect another lockdown to take place in Greece.
§ Eurosystem funding amounted to 8.0 billion euros through the TLTRO III program.
§ The CAD ratio increased by 110 basis points q-o-q to 15.5% and the CET1 ratio reached 13.0% in the first half, accounting for the Cairo/FPS impact.
§ Customer deposits rose by €0.3bn in H1:20 and the loans to deposits ratio substantially improved to 81.6% during the same period, from 86.5% in H1:19.
§ Distribution of the SPV shares to Eurobank Holdings shareholders in the form of capital return, approved by AGM. Eligible shareholders to receive 1 SPV share for each 12 Eurobank shares SPV shares distribution expected last week of September. Trading expected to commence on Athens stock exchange alternative market (ENA PLUS) by Sep 30th 2020. Fair value of the distributed shares at €57.5m; €1.6 cent per Eurobank share, as evaluated by independent auditor
§ T/BV per share now at 1.36 euro, the bank trades at 0.29x P/TBV.
The following table summarise Q2:20 reported figures vs. consensus estimates:
SARANTIS (Q2/H1’20 preview): The company will report a Q2/H1’20 set of results today after market close. Following an extraordinary performance in Q1’20, both domestic and across SEE operations, in Q2 we expect a slowdown in both territories amid across the board retail sales networks lockdowns, selective cosmetics market deceleration (domestic and retail networks cease of operations with time differentials) and mass market signs of stabilization (vs growth in Q1) as various types of network were closed (ie Hondos Center) with the only available channel being the S/Ms. SEE will suffer most as lockdown lasted longer and started later than Greece but still within the crucial (in terms of consumption) Easter Period (Catholic and Orthodox). We expect slightly better Greek operations EBIT margin (excluding Estee Lauder EBIT contribution) by 28bps y-o-y (flat q-o-q) with Estee Lauder EBIT coming in higher than Q1’20 (€2.6mn) on flat sales but better operating performance.
§ In Greece we opt for 12% top line growth in H1 to €66.64mn (+31.60% in Q1) implying a flattish (Q2’20) top line performance to €36.82mn (vs Q2’19). Food supplements on pharmacies channel will assist Q2’20 performance whereas a slowdown in all distribution channels (including S/Ms) will be recorded as a result of national lockdown and lower consumption. We see Greek EBIT operations (excluding EL JV) coming in 14.9% higher to €7.33mn, higher than sales growth on operational leverage exploitation and operating costs containment (partial mitigation on government support measures regarding employees’ expenses, lower advertising and promotion expenses). EL EBIT is seen flat q-o-q to €2.6mn, yet 14.1% higher y-o-y.
§ In SEE operations, mainly due to longer lasting regional lockdowns and country specific reasons (ie Polish operations management change and weak Romania-Bulgaria-Hungary operations especially in the mass market channels) we project a radical slowdown in Q2 (-0.5% y-o-y) despite the welcoming of additional sales from 2019 acquisition in Polland (Luksia with additional €5mn top line contribution) on negative lfl growth and operating discrepancies in key markets (Poland, Romania, Bulgaria). We expect €15mn contribution from ERGOPACK’s ongoing integration in Sarantis network on minimal EBIT contribution with the bulk of SEE EBIT profits coming from all other operating countries. All in, we see Sarantis SEE Q2’20 sales flat y-o-y to €63.5mn (following a 16.2% rise in Q1’20 to €57.12mn) whereas H1’20 figure is expected to settle at €120.6mn. On the EBIT line we opt for €9.3mn profits (7.7% overall EBIT margin).
§ At the consolidated level we come in with an estimate for €187.23mn sales (8.73% higher), EBITDA rising 34.66% to €28.33mn on 290bps EBITDA margin expansion (operating leverage effect), EBIT is forecasted to grow by 39% to €21.8mn and finally Net income AM is seen 24.2% higher y-o-y to €16.96mn.
§ The company has yet to provide FY’20 guidance, which was delayed upon the announcement of Q1’20 results in early May. A conference call analyzing H1 performance and providing color on current market conditions trends and FY’20 performance is expected tomorrow.
The following table summarize our estimates for Sarantis H1’20 financial performance:
Conference Call Details: Thursday September 3, 5pm Local Athens Time
§ GR Participants: +30 213 009 6000
§ US Participants: +1 516 447 5632
§ International & UK Participants: +44 (0) 203 059 5872
FOURLIS (Q2/H1’20 review): Retailer Fourlis reported an in line with our estimates set of Q2/H1’20 results. H1’20 sales came in 23.1% lower to €159.5mn spot on our call for €159.8mn. EBITDA slipped to 15.9 million euros, down 31.5% y-o-y and €1mn ahead of our estimate for €14.9mn on better (+36bps) IKEA EBITDA margin (we opted for flat). The company reported a widening net loss for the period to €7.2mn, €1mn worse than our call for €6.2mn loss on higher depreciation and lease charges (IFRS 16). Severe impact of measures taken for the COVID 19 outbreak are to blame for the lower turnover as in all operating countries but in different time frames lockdown of all retail network was effective for circa 2 months. Net Debt shaped at €102.8mn (vs €106.2mn in FY’10) while CAPEX amounted to €10.4mn. We have set our previous TP of €8.1/share under review as well as previously OVERWEIGHT recommendation to account for the pandemic development and will revert with an update.
The following table summarize Fourlis Q2/H1’20 financial performance vs our estimates:
IKEA sales dropped 20.3% y-o-y to €106.0mn. Greece sales were down 21.0% to €66.12mn (we stood at €67mn) while in other countries (Bulgaria, Cyprus) sales decreased 19% y-o-y to €39.86mn coming in €5.8mn higher vs our estimate. First half IKEA EBITDA stood at €10.24, 17.2% lower y-o-y and €1.2mn (+11.2%) better than our call (of€9.1mn) on better IKEA gross margin across all regions.
During the conference call we will seek color on the business outlook in the reminder of the year, current prevailing trends after summer holidays, net debt evolution for the year and updated CAPEX guidance.
Conference Call Details: Wednesday September 2, 5pm Local Athens Time
§ GR Participants: +30 213 009 6000 or +30 210 94 60 800
§ US Participants: +1 516 447 5632
§ UK Participants: +44 (0) 800 368 1063 or +44 (0) 203 059 5872
§ Other International Participants: +44 (0) 203 059 5872
Head of research
29 Alexandras Avenue
Tel: +30 210 6478755/754
Fax:+30 210 6410139
Email: [email protected]