Monday, May 31, 2021- Market Monitor- Market Comment

Stocks ended higher for a third straight session on Friday, but trading activity remained slow and thinnish. Europe’s gains set the tone.

General index ended at 887.60 points, adding 0.48% to Thursday’s 883.39 points. On a weekly basis it advanced 2.31%. The large-cap FTSE 25 index expanded 0.45% to close at 2,148.05 points and the banks index improved 0.77% on National collecting 1.97%. This time it was non-bank blue chips that pulled the cart out of the mud, with Jumbo rising 4.29% and Fourlis earning 3.21%, while Aegean Airlines gave up 4.14%, Sarantis eased 2.44%, Viohalco dropped 2.12% and Lamda Development parted with 1.63%. In total 69 stocks reported gains, 43 registered losses and 19 remained unchanged. Turnover amounted to 90.5m, down from Thursday’s €308.2m.

Last trading session for May – so far down 2.5% q-o-q and up 9.72% ytd. Selective interest and rotation in large caps to support levels.

¢    In the Spotlight

Greece/PDMA:  Greece seeks to raise €625mn through the offering of 26-week Treasury-bills on Wednesday, June 2, the debt office said. Government may accept non-competitive bids of up to 30% of the initially offered amount during the auction and another 30% by Thursday, June 3. Settlement will take place Friday, June 4. In the previous auction yield was set at -0.32%.

Greece/PPI: Producer price index (PPI) in industry gathered further pace in April, rising 14.6% y-o-y in April on top of a 9.1% rise in the previous month, the National Statistics Service of ELSTAT said. On a monthly basis, PPI advanced 0.7%. In April 2020, the respective annual change of PPI was -13.9%. PPI in the domestic market rose 10.7% while the index in the non-domestic market advanced 28.9%.

Greece/Unemployment: Unemployment rate slightly fell in February to 15.9% y-o-y, from the upwardly revised reading of 16.1% in January, data from the National Statistics Service of ELSTAT showed. In February 2020, the jobless rate was 15.7% Seasonally adjusted data showed that the number of unemployed amounted to 700.8K while the number of persons outside the labor force reached 3.46 million, up 5.5% y-o-y and 0.2% m-o-m. Job-seekers aged 15-24 and women remained the most vulnerable groups, with the unemployment rate averaging 37.4% and 19.0% respectively.

QUEST GROUP: Quest Group has agreed to sell its 85% subsidiary specializing in electronic payments Cardlink, to French group Worldline. The deal was announced last Friday and provides for the sale of 92.75% of the company to Worldline, with Cardlink CEO Mr. Drimiotis retaining a 7.5% stake and remaining in his post. The agreement also includes Cardlink One, the licensed payment branch which along with Cardlink “is evolving today into a high-technology autonomous market that secures the interest of large international companies,” according to Quest. Worldline will pay €135mn equity value for the transaction, both companies announced. The deal also includes another €20mn (debt and lease obligations) valuing Cardlink at Enterprise Value (EV) €155mn. CARDLINK recorded FY:20 sales of €34.2mn, EBITDA €11.95mn, EBT €3.06mn and Net Profit of €2.55mn. The transaction implies and EV/EBITDA multiple of 13x and PE 52.94.  Quest said its divestment will secure capital gains of some €87 million – i.e. 15x the original investment back in 20215 when it acquired it for €6.5mn. Total proceeds from Cardlink’s sale for Quest Group will reach €93mn. We expect part of this cash to be returned to Quest’s shareholders, e2/share on our estimate. This transaction follows the Piraeus Bank agreement with Euronet Worldwide for 100% of the lender’s card payment services costing €300mn. Quest’s secures additional cash to invest in its core business and reward its shareholders. We keep our OVERWEIGHT stance and will adjust our model accordingly. Quest trades at projected FY:21 PE 16.6, EV/EBITDA 8.1x

INFORM LYKOS: AGM to take place on June 18.

PPC: AGM on June 24. No FY:20 dividend.

LAMDA DEVELOPMENT: AGM on June 23.

 

PIRAEUS BANK: AGM on June 22.

NBG (Results Q1:21 review): NBG delivered a very strong performance in the first quarter of the year with profit after tax from continuing operations at €578 million, up by 42% year-on-year, assisted from trading gains from its bond portfolio . With regards to underlying profitability, core operating profit in the first quarter from continued operations increased by 42% y-o-y, standing at a solid €95 million. Core income was up by about 5%, led by NII, up by 6% year-on-year, despite the drag from lower NPE interest. In more details:

Cost containment continue to bear fruit. OpEx was down 9% y-o-y, with personnel expenses, nearly 17% lower y-o-y, reflecting savings from the VS voluntary exit scheme programs, largely in play through 2020 concerning approximately 900 FTEs. This combination yielded a notable 9 percentage point reduction efficiency ratio with a cost of core income settling at 52%. The resulting core operating profit, annualized, puts the bank in line to meet guidance for full year ’22 core operating profit of €490 million, which, would yield a core return on equity of about 9%. Overall, profitability after tax came in at a very strong €580 million, supported by large trading gains.

Domestic disbursements, including repayments of working capital facilities over the period, reached €1.1 billion in the first quarter of the year, driving the expansion of performing corporate book by €1.6 billion or 12% y-o-y. NBG is planning total disbursements of €3.5bn for FY2021

NBG said that the €3bn moratoria loans experienced negative organic formation of €130 million q-o-q. The experience through May 20 is even better than guidance as ex-moratory appliance in earlier years, i.e., greater than 30 days past due, are less than 7% of the aforementioned 3 billion stock and a very small amount are over 90 days past due, less than 2%. Overall, the impact from COVID on asset quality is likely to be significantly less than initially expected. CoR stood at 114bps in line with estimates with CET-1 at 16.1% and FLB3 basis at 14%.

Domestic gross nonperforming exposures stood at €4 billion, net NPEs at €1.5 billion and these include €1.5 billion of forborne NPEs less than 30 days past due with strong possibility to cure. Cure’s at over €200 million in the first quarter remained robust.

With regards to Frontier NBG said that expects the transaction to conclude by early July; CoR in 2021 to settle at 100bps; Trading gains still in balance sheet but not disclosed in the CC. NBG is planning one more large transaction. It will probably complete in the first quarter to half of 2022. Finally, NBG repeated the statement for need of SCI.

The stock trades 0.41x 2021 T/BV and is our top pick from banking sector.

The following table summarise results vs. our estimates:

NBG

Act.

Act.

Act.

Latest read

Overview

Est.

(In Million Euro)

1Q:20

4Q:20

1Q:21

QoQ

YoY

1Q:21

vs Est.

NII

277

314

294

-6,4%

6,0%

290

1,3%

Fee income

66

68

67

-1,6%

1,2%

66

1,2%

Trading Income

788

283

511

80,1%

-35,2%

320

59,5%

Insurance/Other Income

-12

-15

-20

-13

Total income

1.119,0

649,9

851,5

31,0%

-23,9%

663

28,4%

Operating costs

-207

-268

-189

29,5%

8,7%

-193

2,1%

Pre-provision-profits

912,0

381,9

662,5

73,5%

-27,4%

470

41,0%

Provisions

-486

-431

-77

82,2%

84,2%

-80

4,1%

Other results

-117

-19

-6

69,0%

95,0%

-5

PBT

309,0

-67,9

580,0

954,2%

87,7%

385

50,6%

Corporate taxes

4

-11

-3

74,5%

-170,0%

4

-170,0%

Net profit (continued)

305

-79

577

831,6%

89,2%

389

48,4%

Discontinued operations

0

-343

-19

94,5%

0

Net profit

305

-422

558

232,3%

83,0%

389

43,5%

Minorities

1

1

-1

-200,0%

-200,0%

1

Attributable net profit

306

-423

557

231,7%

82,1%

390

42,9%

 

ELLAKTOR: The company appointed new CFO Mr Revelas replacing Mr Poulopoulos.

 

EUROPEAN RELLINACE: Extraordinary GM decided the cancellation of 910,316 treasury shares as of June 2. The shares were acquired at an avg price of €4.46/share.

ELTON CHEMICALS: AGM greenlights FY:20 gross dividend distribution of €2.138mn (gross €0.08/share, net €0.076/share). Ex-dividend date June 28. Dividend payment July 5.

MOH: the company will place 96,953 treasury shares (that were acquired during the buyback program, 0.0875 of share capital) at a minimum price of €13.2/share between May 31 to June 18 and temporally freeze current buyback program until the sale is completed.

NIKAS: The company clarified that the recent deal between CHIPITA and Mondelez International does not include the company.

GEK TERNA: On May 27, the company bought 44,250 shares for a total consideration of €417.105K (€9.4261/share).

PROFILE: On May 26 and May 27 the company bought 2,200 shares for a total consideration of €10.163K (€4.62/share).

OTE: Over the period May 21 to May 27 the company bought 266,500 shares at an avg price of €14.7081/share for a total consideration of €3.919mn. Total treasury stands at 4,390,500 shares or 0.954% of share capital.

Manos Chatzidakis

Head of research

BETA SECURITIES

29 Alexandras Avenue

11473 Athens,Greece

Tel: +30 210 6478755/754

Email: mchatzidakis@beta.gr