Thursday, August 05, 2021- Βeta Securities: Market Monitor- Market Comment – In the Spotlight

¢    Market Comment

Athens Stock Exchange index failed to ride the wave of stock growth across most European bourses on Wednesday, settling instead for minor gains for the benchmark that once again proved reluctant to top the 900-point mark.

The Athens Exchange (ATHEX) general index closed at 895.71 points, adding 0.06% to Tuesday’s 895.19 points. The large-cap FTSE 25 index expanded just 0.01% to end up at 2,152.23 points. FTSE mid Cap almost flat adding a mere 0.02% to end at 1,442.83 points. The banks index eased 0.18%. Eurobank fell 0.80% but Alpha rose 0.18%. PPC and Coca-Cola HBC boosted the index with respective gains of 1.77% and 1.58%, while Ellaktor parted with 5.69% and OTE telecom dropped 1.60%.

In total 56 stocks saw gains, 54 registered losses and 51 remained unchanged. Turnover amounted to €43mn, down from Tuesday’s €52.2 million.

Another uninspiring session expected today with volatility to preserve again and final sign dictated by international markets. Focus on corporate results with NBG reporting after market close and OTE before the opening.

¢    In the Spotlight

 

Greece/PDMA: Greece raised €625mn through the offering of 13-week Treasury-bills on Wednesday, at -0.4%, unchanged vs the previous auction. The government accepted non-competitive bids of up to 30% of the initially offered amount during the auction bringing the total amount to €812.5mn. It may accept another 30% by Thursday, August 5. Settlement will take place Friday, August 6.

 

Greece/AIA July Traffic Stats:  Athens International Airport said that July passenger traffic more than doubled in July compared to the previous year, but remained well below the 2019 levels. Traffic was up 107.5% y-o-y but 38% below June 2019. Passenger July numbers stood at 1.85 million. “This outcome points to a gradual improvement compared to the previous months, as the lifting of movement restrictions since mid-May 2021 and the peak summer holiday period, support a progressive recovery,” AIA said in a statement. The improvement was more obvious in the domestic market, where traffic was below the respective 2019 levels by 26%, while international demand also showed recovery signs, with a 43% decline versus the corresponding 2019 traffic, AIA noted. In the period January- July 2021 the airport’s passenger traffic totaled 4.5 million, a decline of 5.7% compared to 2020, and 68.3% compared to 2019. Domestic passengers exceeded the 2020 levels by 9.6%, while international passengers were below the respective 2020 levels by 14.4%. Both domestic and international travelers were below the same period 2019 by 56.8% and 73.4%, respectively.

JUMBO: In an announcement yesterday Jumbo said that July sales were up by 0.7% leading to a y-t-d growth rate (January to July 2021) to 10%. Despite the apparent lack of the full range of products due to the disruption of the supply chain, the alleviated cost of raw materials and increased transportation costs the group managed to increase domestic (Greek sales) by 2%, aided by online store sales and despite operating with a restriction on the number of customers allowed inside the stores. The controlled restraint of the company’s exports of goods to the 6 countries in which the Group is present through partnerships (namely Albania, Kosovo, Serbia, Northern Macedonia, Bosnia and Montenegro), led the July 2021 net sales of the parent company – excluding intragroup sales – to demonstrate a small decrease of approximately -0.7% compared to July 2020. In total, during the seven months of the year (January-July 2021) the net sales of the parent company – excluding intragroup sales – increased by approximately + 3% y-o-y. In Cyprus July was down by 3% bringing y-t-d growth rate at +12%. Bulgaria July sales came in 11% higher with y-t-d at +16%. In Romania, the only country where stores operate normally with no restrictions in number of persons allowed, July was up by 1.84% despite strong comparable basis y-o-y, settling January – July 2021 growth rate at +28%.

ELLAKTOR: Rights issue of €120.5mn was oversubscribed 2.2x.

PROFILE: During August 2 and August 3, the company bought 4,300 shares for a total consideration of €21.438K (€4.98/share).

PAPOUTSANIS: New 98,750 shares resulting from the exercise by executives of the company’s stock option plan commence trading on Monday August 9. Stock option plan exercise price was €1/share.

ALPHA TRUST ANDROMEDA: NAV as of end July stood at €36.8158/share vs a stock price of €27.4 implying a 25.6% discount over NAV.

LAMDA DEVELOPMENT: H1:21 results to be published on September 29 after market close rather than September 15 initially scheduled.

 

Piraeus Bank (Q2:21 review): Piraeus reported an expected set of Q2:21 financial results characterized by loan book expansion, week trading income and further NPE’s reduction. In more specific:

·        New loan production of €3.4bn in H1, annual runrate ahead of €5.7bn target for 2021

·        Strong growth in client assets (deposits and mutual funds) by €2.2bn in H1

·        Net interest income (NII) amounted to €772mn in H1.2021, up 6% yoy, on the back of increased fixed income holdings, improved deposit costs and the utilization of the TLTRO III facility

·        Net fee income (NFI) in Q2.2021 stood at €101mn, +27% yoy, a robust performance marking the best quarter ever for Piraeus on a recurring basis

·        Operating expenses in H1.2021 reached €444mn on a recurring basis, -2% yoy. Staff costs were down 9% yoy to €96mn, G&A costs in H1.21 were up 7% yoy at €195mn, on the back of higher costs for projects associated with the whole corporate transformation and NPE clean-up efforts.

·        Cost-to-income on a recurring basis, improved to 41% in Η1.2021 vs 49% a year ago, mainly on the back of reduced staff costs and increased income.

·        Recurring core PPI (NII+NFI-OpEx) at €505mn, +18% yoy

·        Operating expenses on a recurring basis at €444mn, -2% yoy

·        Recurring cost-to-income at 41% in H1, compared to 49% a year ago

·        Recurring pre-tax profit of €358mn in H1, double compared to H1.2020

·        Accounting for the NPE clean-up losses, reported result stood at -€2.5bn for H1 in line with Piraeus estimates and capital plan

·        NPE reduction of €13.5bn in H1, NPE ratio at 23%, halved in six months, on track to single-digit NPE ratio

·        Total capital ratio at 16% and fully loaded total capital ratio at 14%, both proforma for the Sunrise 1 portfolio RWA relief

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 enhanced balance sheet. Piraeus trades 0.29x its TBV while on a pro forma basis P/TBV is at 0.32x.

The following table summarizes Piraeus Bank Q2:21 financial performance vs our estimates:

Bank of Piraeus

Overview

Est.

(In Million Euro)

2Q20

1Q21

2Q21

QoQ

YoY

2Q21

vs Est.

NII

367.2

365.5

407.0

11.3%

10.8%

412

-1.2%

Fee income

79.7

75.7

101.0

33.4%

26.7%

88

14.8%

Trading

63

418

98

-76.5%

55.6%

20

390.0%

Other Income

0

0

0

0

#DIV/0!

Total income

510

859

606

-29.4%

18.8%

520

16.5%

Operating costs

-225

-225

-266

-18.3%

-18.2%

-270

1.5%

Pre-provision-profits

285

634

340

-46.4%

19.3%

250

36.0%

Provisions

-142

-961

-2,279

-137.1%

-1504.9%

-2,300

0.9%

Other results

-18

-30

-1

96.7%

94.4%

-30

96.7%

PBT

125

-357

-1,980

-454.5%

-1685.1%

-2,080

4.8%

Corporate taxes

41

46

65

41.3%

58.5%

50

30.0%

Net profit (continued)

84

-403

-2,044

-407.1%

-2535.9%

-2,130

4.0%

Discontinued operations

2

0

1

-50.0%

0

Net profit

86

-403

-20,485

-4981.8%

-23943.9%

-2,130

-861.7%

Minorities

1

3

0

0

#DIV/0!

Attributable net profit

87

-400

-2,045

-411.1%

-2452.9%

-2,130

4.0%

NBG (Q2:21 results preview) – 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

OTE (H1:21 preview Before the Open): The company is expected to report Q2:H1 ’21 results tomorrow before market opening. Consensus expects an improved set of results as pandemic retreats with improved operating trends in Greece whereas Romanian operations, following the deconsolidation of the fixed line business is also expected to improve its top line while EBITDA and bottom line will be impacted by on going deconsolidation costs.

The following table summarizes OTE’s Q2:H1’21 financial performance based on consensus estimates:

ΟΤΕ

2020

2021

Y-o-Y

2020

2021

Y-o-Y

EUR thous.

Η1

Η1

(%)

Q2

Q2

(%)

Sales

1,859,300

1,588,000

-14.6%

1,062,000

800,100

-24.7%

EBITDA

628,500

615,000

-2.1%

332,000

313,800

-5.5%

EBITDA Mrg

33.8% 

38.7% 

+492 bps 

31.3% 

39.2% 

+796 bps 

Net Income

181,000

230,000

27.1%

84,400

128,600

52.4%

Net Mrg

9.7% 

14.5% 

+475 bps 

7.9% 

16.1% 

+813 bps 

OTE’s management will host a conference call: Thursday August 5 17:00 (GREECE) / 16:00 (CONTINENT) / 15:00 (UK) /10:00 (EASTERN US) the same day following the release, to review the results

Greece     + 30 210 9460 800

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

USA         + 1 516 447 5632

Germany  + 49 (0) 69 2222 4493

Other results:

FRIGOGLASS (H1:21 review):  Results recorded an improvement in top line and EBITDA in Q2:21 but bottom line was burdened by €13.8mn write offs related to fire incident in company’s production facilities in Romania. In a snapshot:

·         Sales were up by 45% following the easing of pandemic related restrictions and weak comparatives y-o-y

·         FX-neutral Glass Operations’ sales increased by 67%, led by volume recovery and pricing initiatives across all operations; Reported sales +36.5%

·         EBITDA margin enhancement of 200 basis points to 14.1% following improved cost absorption and pricing

·         June’s fire incident in our commercial refrigeration plant in Romania resulted in assets write-offs and expenses of €13.8 million

·         Strong execution of business continuity plan to limit the impact from the fire incident by ramping up production in Russia and initiating an assembly line in Romania early in Q4

·         June-end cash balance of €61.2 million and €13mn of undrawn credit lines sufficient to meet 2021 financing commitments and working capital needs

·         Successful completion of furnace capacity expansion and modernization project in Nigeria in June, despite COVID-19 headwinds

The following table summarizes Frigoglass Q2/H1:21 financial performance:

FRIGOGLASS

2020

2021

Y-o-Y

2020

2021

Y-o-Y

EUR thous.

Η1

Η1

(%)

Q2

Q2

(%)

Sales

208,672

201,596

-3.4%

72,775

105,712

45.3%

EBITDA

29,348

29,391

0.1%

8,810

14,950

69.7%

EBITDA Mrg

14.1% 

14.6% 

+51 bps 

12.1% 

14.1% 

+204 bps 

Net Income

586

-11,038

-1983.6%

-3,859

-12,246

-217.3%

Net Mrg

0.3% 

-5.5% 

-576 bps 

-5.3% 

-11.6% 

-628 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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