PIRAEUS SEC – ΜOTOR OIL – Going from strength to strength



Market Cap. EUR 1,854

Free Float 51.2%

Target Price: EUR 18.5 (from EUR 17.2)

Rating: Outperform (Unchanged)

Total Expected Return 14.7%


Going from strength to strength

  • We expect a strong quarter underpinned by healthy domestic demand on heating oil and increased refining margins
  • We see Q1 EBITDA and EPS up by 26% and 40% respectively
  • We raise our target price to EUR 18.5 due to lower 10Y GGB yield 

MOH reports Q1 results on 24 May

The Greek refiner will report Q1 results after the close of the market with the management holding a conference call on the 25th May at 17.30 Greek time/15.30 UK time. We forecast clean group EBITDA of EUR 160.3mn (+26%); increased refining margin, c4% stronger USD vs the EUR and slightly higher volumes/better volume mix underpin the improved operating performance in Q1. The latter will be reflected in improved marketing performance; we expect the EBITDA of the division to increase in the low teens. Improved cash flow and lower debt YoY will drive financial expenses down by c14%, (no real benefit yet in Q1 from the recently issued bond). Hence we expect an EPS of 0.72, up from 0.52 in 1Q 2016, an increase of 40%.

Q1 volumes/margins

We expect volumes up by a mere 1% with exports up by 2% and domestic up by 4% due to strong demand on heating oil, courtesy of unfavourable weather patterns in Greece during Q1. On the other hand we expect no sales to PPC (management has recently indicated that PPC sales will be essentially zero in 2017), while we also expect slightly lower aviation/shipping volumes. In terms of margins, we expect MOH to report a refining margin in the tune of USD 9.3/bbl, up from USD 9.0/bbl in 1Q 2016 and USD 8.3 in 4Q 2016.

Bond issue to compress further financing costs

MOH issued a 5Y 3.25% EUR 350mn senior note at the end of Q1 allowing the retirement of the more expensive 5.125% 2019 EUR 350mn issue with the benefit feeding in the following quarters.


We adjust the 10Y GGB yield to 5% from 6% and we calculate a WACC of 9.9%. Our DCF model generates an end-2017 price target of EUR 18.5, up from EUR 17.20. Despite the run of the past few quarters, the valuation does not appear stretched; MOH trades 7.7x its forward clean profits, 4.1x EV/EBITDA and 5.2x EV/DACF, all at a discount vs 10Y averages and MOH’s peers. Note that we stand 2.6% above Bloomberg consensus. We retain our Outperform recommendation on the stock

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