Monday, August 02, 2021- Βeta Securities: Market Monitor- Market Comment – In the Spotlight

Βeta Securities: Market Monitor- Market Comment – In the Spotlight

  • Market Comment

The benchmark of the Greek stock market completed on Friday nine consecutive sessions of growth, matching this year’s record in early April, and narrowly swinging July from a month of losses into one of gains, ending the downward slide set by May and June. That was largely courtesy of Friday’s growth of the banks index, which played a big part in the main index posting a 0.38% monthly increase.

  • The Athens Exchange (ATHEX) general index closed at 888.26 points, adding 0.63% to Thursday’s 882.74 points. On a weekly basis it advanced 2.76%. The large-cap FTSE 25 index expanded 0.81% to end up at 2,132.69 points, though mid-caps contracted 0.02% to 1,435.02 level.

The banks index improved 1.72%, as Piraeus rose 4.92%, National earned 4% and Eurobank fetched 1.66%, while Alpha parted with 0.64%. PPC increased 2.38 and Mytilineos climbed 2.36%, as Titan dropped 2.21%.

In total 51 stocks saw gains, 66 registered losses and 44 stayed put. Turnover amounted to €68.13mn, up from Thursday’s €41.2 million.

Banks to remain on the spotlight again on positive news flow on deferred taxation developments and successful completion of ECB’s stress tests. Activity to remain subdued, caught in summer doldrums. Another positive session expected.

  • Ιn the Spotlight 

Retail Sales/Greece: Retail sales growth increased in May, albeit at a milder pace compared to April, with the turnover rising 15.0% y-o-y and volumes 15.3%, National Statistics Service said. In April, the respective rises were 38.8% and 39.1%. On a monthly basis in May, retail sales were up 2.1%% and 3.0% in turnover terms and volume terms respectively. On a seasonally-adjusted basis, retail sales were up 5.8% m-o-m and 5.0% m-o-m in volume terms. 

  • Greece/Producer Price Index: Producer price index in industry continued its rising course, firming 12.6% y-o-y in June on top of a 13.7% rise in the previous month, the National Statistics Service or ELSTAT said. On a monthly basis, PPI rose 1.5%. In June 2020, the respective annual change of PPI was -7.4%. PPI in the domestic market rose 9.8% while the index in the non-domestic market advanced 22.2%.

Greece/PDMA:  On August 4, 2021 the Hellenic Republic will auction 13 Weeks T-Bills, in book entry form, with maturity November 5, 2021. The amount to be auctioned is €625mn. Settlement date will be August 6, 2021.  During the auction non – competitive bids can be submitted up to 30% of the auction amount. On top of that, Primary Dealers can submit non-competitive bids up to another 30% of the auctioned amount, until August 5, 2021.

  • Banking Sector: The European Central Bank has given its nod to a change in the legislation concerning deferred tax credits of banks, relieving the local credit system from the risk of the state triggering the recapitalization clause in case of losses. In other related news all 4 major Greek banks succeeded in passing ECB’s stress tests last Friday.

Three out of Greece’s four main banks showed core capital ratios falling to 8% or lower under an adverse scenario in the European Central Bank’s latest health check of second-tier banks, according to the results that were issued on Friday. National Bank showed a Common Equity Tier 1 (CET1) ratio of 6.4% in the worst-case scenario under the stress test, while Piraeus Bank came in at 6.5% and Eurobank stood at 8%. Only Alpha Bank avoided the lowest category in the test, with a CET1 ratio of 8.4% in the adverse scenario.

  • Piraeus said that the stress test exercise did not incorporate initiatives introduced since the end of 2020, which included a €1.38bn capital increase and a €600mn Tier 1 bond sold in the second quarter of the year. Alpha Bank also carried out an €800mn share placement in June, while National Bank agreed to sell its insurance arm for €500mn in March.All the above actions were not included in all the scenarios examined. Alpha’s CET1 as of end December 2020 stood at 17.1% (or 14.6% fully loaded), Piraeus Bank at Basil III tier ratio at 17.1% (15% fully loaded), Eurobank;s CAD  stands at 17.5% (Fully loaded CET! At 14.9%) while NBG’s CET1 Fully loaded came at 12.8% (or 15.7% without IFRS 9 implementation). 

Energy Sector: Nearly one quarter, or 5.2 billion euros, of the new National Strategic Reference Framework (NSRF) amount allotted to Greece, covering 2021 to 2027, will be used to support the country’s green-energy transition and decarbonization efforts. The funding will be divided into two programs, one for Environment, Energy and Climate Change, worth 3.61 billion euros, and the other for Fair Developmental Transition, worth 1.63 billion euros. The two programs will offer support for investments promoting RES penetration, environmental protection, a circular economy, the climate change defense, while also supporting the decarbonization effort in the western Macedonia and Megalopoli regions, both lignite-dependent local economies, as well as the islands.

  • PPC:  PPC is reportedly set to kick-off a voluntary exit scheme, targeting up to 1280 employees who work in lignite mines and plants and are aged over 51.  Press reports said that the scheme will run from September 1 to October 30, while departures are scheduled after the end of November. The utility’s medium-term strategic plan calls of less 11,000 employees by 2023. In other news, press reports indicate that four funds passed in the next phase for the acquisition of a 49% stake at HEDNO. The binding offers for the acquisition of a 49% stake at HEDNO should be submitted by September 4. 

NBG/Bank of Piraeus (Q2:21 results preview): NBG and Bank of Piraeus are set to announce Q2:21 this week. On core income we expect stable trends while Piraeus will book Phoenix and Sunrise I securitization losses. In more details:

  • Piraeus Bank – Wednesday, 4 August: Piraeus is expected to post improved core income on the back of new loan disbursements (c€5.7bn) and one off TLTRO interest rate differentiation and better commission income. NII is expected at €412m of which c45m related to ECB negative rate while commissions are expected to post a double digit growth at €88m up +16.2% q-o-q.
  • Operating costs are also seen higher at €270m on the back of supplementary VRS (+500 employees). All in the bank should post €250m PPP. Further down we expect BoP to proceed with the remaining Phoenix securitization impairments (50% booked in Q1:21) and Sunrise I amounting €2.08bn.
  • Overall a transitional quarter in which equity is burdened with scheduled securitization transactions while at the same time €600m AT1 bond and €1.3bn SCI flows will be enhance balance sheet. Piraeus trades 0.29x its TBV while on a pro forma basis P/TBV is at 0.32x.

The following table summarise our estimates:

Bank of Piraeus

Act.

Act.

Est.

Overview

(In Million Euro)

2Q20

1Q21

2Q21

QoQ

YoY

NII

367.2

365.5

412.0

12.7%

12.2%

Fee income

79.7

75.7

88.0

16.2%

10.4%

Trading

63

418

20

-95.2%

-68.3%

Other Income

0

0

0

Total income

510

859

520

-39.5%

2.0%

Operating costs

-225

-225

-270

-20.0%

-20.0%

Pre-provision-profits

285

634

250

-60.6%

-12.3%

Provisions

-142

-961

-2.300

-139.3%

-1519.7%

Other results

-18

-30

-30

0.0%

-66.7%

PBT

125

-357

-2.080

-482.5%

-1765.2%

Corporate taxes

41

46

50

8.7%

22.0%

Net profit (continued)

84

-403

-2.130

-428.4%

-2638.3%

Discontinued operations

2

0

0

Net profit

86

-403

-2.130

-428.4%

-2579.3%

Minorities

1

3

0

Attributable net profit

87

-400

-2.130

-432.4%

-2550.7%

  • Conference call details: (4 August 18:00 GR-Time)

§  GR                          + 30 213 009 6000 or +30 210 9460 800

§  UK TF                     + 44 (0) 800 368 1063

§  UK & Other             + 44 (0) 203 059 5872

§  USA                        + 1 516 447 5632

  • NBG – Thursday, 5 August 17:30 GR-Time: 

We expect stable core income trends with NII flattish (0.4% q-o-q) on the back of new disbursements and commission income up 1.8%. In the absence of significant trading income, we expect total income to shape at €328m. Operating cost is seen at €188m down 0.5% q-o-q and 5.5% y-o-y on the back of recent VRS. Pre-Provision-Profits are forecasted at €140m.

  • We pencil in €75m in provisions and €10m to other impairments following Q1:21 guidance and we arrive to net profit of €55m. Finally, after the deduction of disc. operations we expect NBG to post net profits of €36m in Q2:21. Note that the bank has already booked in Q4:20 the transaction loss for Frontier securitization which will bring NPE’s ratio at 13%. NBG trades 0.4x its tangible book value.

On the conference calls we will seek color on core trends, credit expansion and moratoria NPEs.

  • The following table summarise our estimates:

NBG

Act.

Act.

Est.

Latest read

Overview

(In Million Euro)

2Q:20

1Q21

2Q21

QoQ

YoY

NII

273

294

295

0.4%

8.3%

Fee income

57

67

68

1.8%

19.3%

Trading Income

23

511

0

Insurance/Other Income

-11

-20

-35

-79.5%

-233.3%

Total income

341.9

851.5

328.0

-61.5%

-4.1%

Operating costs

-199

-189

-188

0.5%

5.5%

Pre-provision-profits

142.9

662.5

140.0

-78.9%

-2.0%

Provisions

-76

-77

-75

2.2%

1.8%

Other results

-18

-6

-10

-72.4%

42.9%

PBT

49.0

580.0

55.0

-90.5%

12.2%

Corporate taxes

3

-3

0

Net profit (continued)

46

577

55

-90.5%

19.6%

Discontinued operations

10

-19

-19

0.0%

Net profit

56

558

36

-93.6%

-35.7%

Minorities

0

-1

-1

0.0%

Attributable net profit

56

557

35

-93.7%

-37.5%

  • Conference call details: (5 August 18:00 GR-Time)

§  GR                          + 30 213 009 6000 or +30 210 9460 800

§  UK TF                     + 44 (0) 800 368 1063

§  UK & Other             + 44 (0) 203 059 5872

§  USA                        + 1 516 447 5632

  • Ideal Group: As of today the 23,176,792 new shares of the company are admitted to trading on the ATHEX following the recent share capital increase through contribution in kind. The total number of the company’s listed shares on ATHEX amounts to 31,475,259 shares 

Hellenic Petroleum: The company said that its Board of Directors resolved the initiation of the hive-down process by way of a spin-off of its refining, supply & trading and petrochemicals business and its transfer to a new entity that will be established. The Beneficiary shall be an 100% subsidiary of the Company.

  • Frigoglass: H1:21 results out on August 5 before the opening. Conference call the same day at 16:00 GR-Time.

Alpha Bank: Alpha Services and Holdings will announce its H1:21 results on Thursday, August 26, 2021 at 17.20 GR-Time. Conference call at 17.50. The bank said that is seeking a strategic alliance in Greek Real Estate market.

  • Through Project Skyline, Alpha Bank envisages the transformation of Alpha Astika Akinita into a multi-asset real estate investment platform in the Greek market, while the Company’s real estate servicing unit is expected to be acquired by and consolidated under Alpha Bank’s fully-owned subsidiary, Alpha Real Estate Management and Investments S.A. Within the above context, it is intended that  Alpha Astika Akinita enters into a long-term agreement with AREMI for the management of the Company’s real estate portfolio.

The intended timeline for the Transaction currently envisages the launch of the process in early September 2021, the selection of the preferred partner for the Transaction to take place by the end of  the current year, with the consummation of the overall Transaction expected within the first half of 2022.

  • Newsphone: Ankostar acquired 4.28% through a tender offer reaching 93.7%. Ankostar will squeeze out remaining stake and delist the stock.

IASO: During the tender offer that expired on July 28 OCM Luxemburg Healthcare acquired (at €1.5/share) either through the tender offer or through ASE purchases additional 6.76% stake (8,253,474 shares) out of the total 12.78% stake (15,614,132 shares) that it did not control. It now controls a total 93.97% stake in the company (114,796,096 shares) and it intends to proceed to a squeeze out and delisting of the company.

  • Intralot: The company announced that the bond Exchange Offers expired on 29 July  2021. In relation to the 2021 Exchange Offer, as 98.94% of the aggregate principal amount of 2021 Notes outstanding (excluding any 2021 Notes held by Intralot Capital Luxembourg S.A. and its affiliates) are validly tendered by holders for exchange in the 2021 Exchange Offer, the minimum acceptance condition is met as at the expiration deadline.

In relation to the 2024 Exchange Offer, as €118,240,000 of the aggregate principal amount of 024 Notes outstanding (excluding any 2024 Notes held by Intralot Global Holdings B.V. and its affiliates) are validly tendered by holders in the 2024 Notes Exchange Offer, the minimum acceptance condition is met as at the expiration deadline. The expected settlement date for the Exchange Offers is 3 August 2021.

  • On July 28, 2021 certain funds that claim to hold 2024 Notes filed a complaint in the United States District Court for the Southern District of New York seeking a judgment that the Exchange Offers violate the applicable indenture and are voidable under a New York State statute. On July 29, 2021, those funds filed an application seeking a temporary restraining order in relation to the Exchange Offers.
  • The court has scheduled a hearing on the funds’ application for August 2, 2021. The Company believes the suit has no merit, and it intends to oppose the relief being sought and to close the Exchange Offers promptly. In other related news, as of today, the trading of the 4,700,000 own (CR) shares of the company ceases and they are cancelled from the ATHEX. On August 2, 2021, the total number of the company’s listed shares amounts to 152,261,721 (CR) shares.

THRACE PLASTICS: On July 30, the company bought 1,500 shares at €7.6977/share for a total consideration of €11.546K. 

  • GEKTERNA: On July 29, the company bought 17,000 shares at €9.3989/share for a total consideration of €159.780K.

OTE: Over the period July 23 to July 29, the company bought 132,159 shares at an average price of €14.8812/share for a total consideration of €1.966mn. Ote now controls 3,130,613 shares or 0.685% of share capital.

  • MYTILINEOS: On July 29, the company bought 8,454 shares at €15.2378/share for a total consideration of €128.820K. Total treasury stands ta 4.8608% of share capital or 6,945,696 shares. 

Other results:

Motodynamics

2020

2021

Y-o-Y

EUR thous.

Η1

Η1

(%)

Sales

33,802

43,638

29.1%

EBITDA

1,420

2,691

89.5%

EBITDA Mrg

4.2% 

6.2% 

+197 bps 

PBT

-3,534

-1,165

67.0%

PBT Mrg

-10.5%

-2.7%

+779 bps

 

Kind Regards, 

John Kalogeropoulos

Equity Analyst 

29 Alexandras Avenue

11473 Athens,Greece

Tel: +30 210 6478751

Email: ikalogeropoulos@beta.gr

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