Thursday, December 03, 2020 – Market Monitor – Market Comment – Results

Thursday, December 03, 2020 – Market Monitor – Market Comment – Results

¢     Market Comment 

The profit-taking recorded during Wednesday’s session was inadequate to avert another day of growth for the benchmark, which has risen to a new nine-month high thanks to the advance of banks and a handful of other blue chips. 

The Athens Exchange (ATHEX) general index ended at 759.47 points, adding 0.16% to Tuesday’s 758.22 points and bringing y-t-d losses to -17.15%. The large-cap FTSE 25 index expanded 0.28% to close at 1,812.45 points, while mid-caps contracted 0.55% to 1,037.22 level. The banks index rose 1.14%, as National collected another 2.86% and Eurobank increased 2.10%, while Piraeus fell 1.42% and Alpha eased 0.63%. Hellenic Exchanges picked up 2.43%, Coca-Cola HBC earned 1.74% and Jumbo improved 1%, as Motor Oil parted with 3.15%, Fourlis Holdings gave up 2.59% and Viohalco shrank 2.19% 

In total 54 stocks posted gains, 55 took losses and 21 remained unchanged. Turnover amounted to €109.6mn, down from Tuesday’s €140.2mn. 

We expect market to consolidate after nine consecutive positive sessions, focus should come on PPC that presented its new business plan yesterday during its investor day. 

¢     In the Spotlight 

Greece/PDMA: During the auction of €625mn of 26W T-Bills conducted today, the total bids reached €1,634mn and the amount finally accepted was €812.5mn. On top of that, Primary Dealers can additionally submit non-competitive bids up to 30% of the amount initially auctioned until December 3, 2020. Coverage ratio reached 2.61 (vs 1.7 in the previous auction) while yield was once again negative at -0.285 9vs -0.12% in the previous auction).

 

Greece/Banking Sector: Greece’s weighted average interest rate on new deposits remained unchanged in October while the corresponding rate on loans increased, Bank of Greece said. The spread between loan and deposit rates stood at 4.0% from 3.8% in the previous month. The overall weighted average interest rate on all new deposits stood at 0.10%, almost flat m-o-m. In specific, the average interest rate on deposits placed by households with an agreed maturity of up to one year was 0.24%, unchanged. The overall weighted average interest rate on all new loans to households and non-financial corporations stood at 4.10%, up 18 basis points m-o-m.

 

Greece/Retail Sector: The pandemic has been the catalyst for the 8.4% annual growth in supermarket turnover from the start of the year till mid-November, according to the latest data by Nielsen, with 70% of that increase being attributed to the nine weeks of the spring lockdown and the first couple of weeks of the fall lockdown. Figures also show consumers now do their shopping less frequently, reversing the trend observed in the decade of the financial crisis for more visits with purchases of lower value. In addition, new consumer trends include a detailed shopping list and choice of larger stores that allow for social distancing and convenient parking.

 

MYTILINEOS: A Mytilineos-led consortium has been awarded a waste-derived energy recovery project in Chestire, England which will treat 400,000 tones of non-recyclable waste per year. The works will be undertaken by the Sustainable Engineering Solutions (SES) Business Unit for the project’s owners Covanta, Biffa and Green Investment Group. Standardkessel Baumgarte is Mytilineos partner in the project. The project is owned by Covanta, Green Investment Group and Biffa and is part of a wider development known as Protos, a new hub for energy and resource technologies owned by Peel L&P Environmental. The facility is expected to enter into commercial operation in 2024 and it will be operated by Covanta. No financial details were disclosed. On December 1, the company bought 80,000 own shares at €10.9694/share for a total consideration of €877.549K. Total treasury at 3.7932% of share capital or 5,420,084 shares.

 

JUMBO: The company trades ex FY:20 interim dividend gross €0.38/share (net €0.3610/share) as of today.

 

PAPOUTSANIS: Extraordinary GM on December 23 to decide upon a share capital increase through reserves capitalization and distribution of new shares for free to existing shareholders. The hare capital will increase liquidity and will not differentiate existing shareholder structure.

 

ENTERSOFT: Gross €0.045/share (net €0.04275/share) interim dividend cut-off date December 4. Dividend payment December 10.

 

EUROPEAN RELIANCE: On December 1, the company bought 3,811 own shares at €4.706/share for a total consideration of €17.934. Total treasury stock now stands at 741,669 shares or 2.6966% of share capital.

 

THRACE PLASTICS: On December 2, the company bought 8,000 shares at €3.2531/share for a total consideration of €26.025K.

 

INTRALOT: 9M:20 results to be published on Monday December 7 after market hours.

 

NAKAS: The company trades ex FY:20 gross dividend €0.134/share (net €0.1273/share) as of today.

 

PPC (Investor Day Highlights): In a full scale event (with more than 200 investors attending) Public Power Corporation presented yesterday through a digital teleconference its three-year business plan to analysts. The event addressed all major issues providing guidelines on key P/L and B/S elements. In more details:

 

·          Company’s updated “Business Plan” for the period 2021-2023 confirms the shift of PPC to a green energy company which targets in 2023 to reduce conventional production from 11 GW to 8.5 GW, increasing RES from 0.2GW to 1.5GW, retail share at 28.9 TWh from 28.4 TWh and increase the regulated asset base in distribution RAB from €3.0bn to €3.5bn.

 

In order to improve its financial profile and credit risk, PPC guided for specific targets and actions for 2023:

 

§   Group Revenues> €4bn: Despite the estimated market share loss from 64% to 54% PPC said that is aiming to improve customer’s quality profile and safeguard profitable clients.

§   EBITDA > €1.1bn: EBITDA breakdown €460m in retail, €70m in RES, €490 distribution and €130m in lignite/thermal/hydro.

§   CapEx €1.1bn: PPC will gradually reach this target with a step up of €0.4bn in 2020 to €0.8bn in 2021. Main CapEx is related to RES expansion were the group targets to 1.5GW installed capacity of which 76% will be solar plants with fixed PPI. Final target for RES is 6GW which is over the three-year business plan period. CapEx to be financed exclusively from PPC’s operating CF excluding HEDNO sale.

§   Leverage 3.5x: HEDNO partial sale (49%) will provide new liquidity for investments along with a significant debt spin-off. HEDNO tender to start in December, regulatory WACC in the 7% area with estimated RAB of €3.1bn. Management view about dividend not clear yet, still this is to be decided on the market conditions.

§   Delignitization: In addition to the above, PPC said that intends to reduce dependence on lignite and its exposure to CO2 emission rights. In this context loss-making lignite plants decommission is accelerated (Megalopolis 3 closes in 2021 instead of 2022). This translates to c62% reduction to CO2 emissions. Management commented that CO2 emissions prices are expected in the 30 eur/tn levels in the upcoming years. 

§   New Business: Management said that the company’s strategic investments include initiatives in the field of electrification and telecommunications. Regarding the first arm, the company’s goal is to create 1000 new charging points throughout Greece within the next 2 to 3 years. At the same time, PPC is targeting the telecommunications sector and is planning investments, where in the first phase, it will utilise HEDNO network with fibber optics and in the second phase they could host 5G mobile telephony services.

 

Overall PPC is moving on with a realistic plan which secures operating profitability while unveils hidden value. We expect a positive reaction from the market.

 

The following table summarise 9M results:

 

PPC

2019

2020

Y-o-Y

2019

2020

Y-o-Y

EUR thous.

9M

9M

(%)

Q3

Q3

(%)

Sales

3,608,100

3,520,100

-2.4% 

1,302,900 

1,270,500 

-2.5% 

EBITDA

196,200

708,300

261.0% 

87,600 

222,500 

154.0% 

EBITDA Mrg

5.4%  

20.1% 

+1,468 bps 

6.7% 

17.5% 

+1,079 bps 

Net Income

-353,200

12,800

103.6% 

-78,400 

-16,500 

79.0% 

Net Mrg

-9.8% 

0.4% 

+1,015 bps 

-6.0% 

-1.3% 

+472 bps 

 

OTHER RESULTS:

 

IPTO HOLDING (Q3/9M:20 review): CAPEX in 9m stood at €231.7mn, Total debt at €334.8mn, cash at €343mn, Net Cash €8.2mn.

 

IPTO

2019

2020

Y-o-Y

EUR thous.

9M

9M

(%)

Sales

192,300

209,900

9.2% 

EBITDA

139,800

149,200

6.7% 

EBITDA Mrg

72.7% 

71.1% 

-162 bps 

Net Income

64,300

59,400

-7.6% 

Net Mrg

33.4% 

28.3% 

-514 bps 

 

FLEXOPACK (Q3/9M:20 review): Cash reserves at €21.052mn. Total debt at €16.244mn while the company maintains a net cash position as of end September of €3.752mn. 

FLEXOPACK

2019

2020

Y-o-Y

2019

2020

Y-o-Y

EUR thous.

9M

9M

(%)

Q3

Q3

(%)

Sales

68,077

76,260

12.0% 

22,875 

36,441 

59.3% 

EBITDA

11,300

17,355

53.6% 

3,745 

5,950 

58.9% 

EBITDA Mrg

16.6% 

22.8% 

+616 bps 

16.4% 

16.3% 

-4 bps 

EBT

7,204

11,658

61.8% 

 

 

 

EBT Mrg

10.6% 

15.3% 

+471 bps 

 

 

 

 

IKTINOS (Q3/9M:20 review): Cash at €6.3mn, Net Debt at €43mn.

 

ΙΚΤΙΝΟΣ

2019

2020

Y-o-Y

2019

2020

Y-o-Y

EUR thous.

9M

9M

(%)

Q3

Q3

(%)

Sales

34,370

24,080

-29.9% 

11,124 

8,115 

-27.0% 

EBITDA

10,120

5,870

-42.0% 

4,070 

2,279 

-44.0% 

EBITDA Mrg

29.4% 

24.4% 

-507 bps 

36.6% 

28.1% 

-850 bps 

EBT

5,690

1,660

-70.8% 

 

 

 

EBT Mrg

16.6% 

6.9% 

-966 bps