To xρηματιστηριακό σημειωματάριο του μικρομέτοχου (28.8.2020)

Friday, August 28, 2020    Market Monitor

   Market Comment 

The market returned again into negative territory yesterday amid lack of investment interest with the exception of PPC. It was a quiet day yesterday on the Athens Stock Exchange, which mirrored the slight decline on other European markets. 

The general index closed 0.43% down, at 633.09 points. FTSE 25 declined 0.61% to 1,513.94 points. FTSE Mid Cap also in red with losses 0.51% to 829.25 points. The biggest advancers among the blue chips were Piraeus Bank (1.49%), Terna Energy (1.19%), Aegean Airlines (0.85%), Coca-Cola HBC (0.81%) and Titan (0.72%). The biggest losses were sustained by Eurobank (3.11%), Mytilineos (2.14%), OPAP (2.13%) and Hellenic Petroleum (1.90%). Among sectoral indices, Health was up a whopping 6.07% and Foods & Beverages a modest 0.77%. The biggest losses were recorded by Travel & Leisure (1.95%) and Industrial Products (1.68%). The heaviest trading was in Eurobank shares (2,128,057), followed by Alpha Bank (2,095,087). 

Of the 115 traded shares, 36 ended with gains, 58 with losses and 21 with no change. Turnover was €31.01mn similar to Wednesday’s €29.3mn. Total traded volume was 11,072,109 shares. 

The market will continue consolidation in today’s session with sideways movements trying to digest slightly better than expected corporate results from Alpha Bank and Hellenic Petroleum (both announced yesterday after market close) and tracking persisting positive international trends leading S&P and NASDAQ into new record highs. 

   In the Spotlight 

Greece/Budget Execution: Greece revised its January-July budget execution figures from the preliminary data which were released on August 12. On a modified cash basis, state budget posted a primary deficit of €7.46bn against the preliminary figure of €8.2bn. The initial target was for €1.17mn in surplus. The state’s budget deficit surged to €10.9bn, revised down from the preliminary figure of €11.7bn. State net revenues underperformed the target by 15% or €4.2bn, amounting to €23.8bn. The state’s support measures to mitigate the impact from the coronavirus pandemic and the subdued economic activity were behind the deviation.

  • Moreover, the Ministry said it has yet to book €163mn in its financial accounts due to technical discrepancies. In July alone, net revenues underperformed the monthly target by €357mn. Ordinary revenues, which exclude receipts from social security organizations and local governments, underperformed the target by €3.7bn, reaching €26.7bn. Tax revenues fell short of the target by €3.6bn or 14%, amounting to €22.6bn, but they were just €31mn lower than the updated targets as they were included in the Stability Program submitted to the EU on April 30. July tax revenues reached €4.3bn, down €854mn compared to the monthly budget target.

However, tax revenues fell short of the updated monthly target by €402mn, due to the deferral by a month of the first tax income instalment. Public Investment Budget revenues stood at €1.68bn, €523mn below the budgeted target, while state spending amounted to €34.75bn, €4.6bn above target, due to COVID-19 related payments and higher Public Investment Budget spending. In July alone, spending exceeded the target by €1.9bn. 

Greece/GDP: Finance Ministry officials reportedly expect the country’s economic activity to contract by around 10%, exceeding the government’s adverse scenario which called for a 7.9% recession. Recall that Bank of Greece’s similar adverse scenario, associated with a possible second wave of COVID-19 outbreak, called for 9.4% GDP contraction. 

Greece/Credit Expansion: The growth rate of the total credit extended to the economy accelerated further in July, at +8.2% y-o-y versus +6.0% in the previous month, Bank of Greece said. The monthly net flow was positive by €3.2bn compared with a positive flow of €3.7bn in June. Credit growth to private sector increased to 1.5% versus 0.4% in June. The monthly net flow was positive by €1.1bn compared with a positive net flow of €359mn in the previous month. 

Greek Banks: Data from BOG revealed that loans under moratoria have reached €19.76bn as of end July, citing data from the four systemic banks. The outstanding amount of mortgages subject to a temporary suspension of principal and interest repayments stood at €8.7bn. Also, under moratoria were loans to non-financial corporations of €7.9bn, loans to sole proprietors and unincorporated partnerships of €1.4bn and other loans to households of €3mn. 

Banking Sector: Private sector deposits in Greek banks advanced further in July for the sixth straight month, with both corporate and household deposits showing an increase, data from BOG showed. Private sector deposits firmed €3.3bn compared to a rise of €448mn in June, while the annual growth rate stood at 9.5% versus 8.4% in the previous month. Deposits amounted to €151.5bn as of end July. Corporate deposits increased by €2.65bn compared with a rise of €398mn in the previous month, while the annual growth rate increased to 24.8% from 19.3% in the previous month. Deposits placed by households and non-profit institutions rose by €669mn, compared with a rise of €50mn in June, and the annual growth rate stood at 6.0%, unchanged m-o-m. 

CORAL: The company will publish H1’20 financial statements on September 28 after market close. 

PETROPOULOS: On August 26 the company bought 6,873 own shares at €3.96/share for a total consideration of €27.22K. 

ALPHA BANK: Alpha Bank (Q2:20 results review): 

The bank turned into profits of €97.5mn in the second quarter from losses of €10.9mn in the previous quarter beating our call for €60mn profits. Milder provisions and higher trading gains from GGB’s were behind the turnaround. 

In more details: 

·          Net Interest Income was up 2.5% q-o-q to €390.7mn, while

·          Fee and commission income dropped 13% to 77.5 million euros.

·          Trading income reached 128.6 million euros from 85.7 million euros in the previous quarter, “as a result of gains realization from our Greek Government Bonds portfolio,” Alpha said.

·          Core pre-provision income dropped 5.4% q-o-q to €217.3mn.

·          Alpha Bank expressed its satisfaction over the re-launch in June of the €10.8bn NPE securitization, known as Galaxy, saying that it is currently holding advanced discussions with preferred bidders “with a view to receiving binding offers at the beginning of the fourth quarter, in order to proceed with formal closing before year-end.” With the completion of Galaxy sale NPL ratio is expected to drop to 13% with a 250 to 280 bps effect on capital adequacy ratio CEO Psaltis said in the conference call.

·          The NPE stock in Greece contracted by €0.1bn q-o-q to €18.3bn at the end of the second quarter, “with the rate of contraction being affected negatively by reduced liquidations and a slowdown in collection activity due to theCovid-19 lockdown”, the bank noted.

·          The NPE ratio of the Group stood at 43.5% at the end of the quarter, while NPE coverage increased to 44.4%. Total coverage stood at 101.3%. The NPL ratio stood at 30.2%, down from 32.7% a year ago. The NPL coverage ratio stood at 64%, while total coverage including collateral came to 117%.

·          Impairment losses on loans stood at €260.6mn versus €307.4mn in the previous quarter.

·          CET1 stood at €7.9bn, resulting in a CET1 ratio of 17.2%, up by 0.7% q-o-q, supported mainly by quarterly profitability and the decreased Credit Risk.

·          Eurosystem funding increased to €11.9bn, from €3.9bn in the previous quarter, reflecting the full utilization of TLTRO borrowing allowance

 

The following table summarize Q2:20 results vs our estimates:

 

Alpha Bank

Act.

 

Act.

Latest read

Overview

Est.

 

(In Million Euro)

2Q19

1Q20

2Q20

QoQ

YoY

2Q20

vs Est.

NII

388.6

381.2

390.7

2.5%

0.5%

389

0.4%

Fee income

81.2

89.2

77.5

-13.1%

-4.6%

80

-3.1%

Trading

123.7

85.7

128.6

50.0%

4.0%

110

16.9%

Other Income

10.9

9.9

2.6

-73.8%

-76.1%

10

-74.0%

Total income

604.4

566.0

599.3

5.9%

-0.8%

589

1.7%

Operating costs

-281.7

-259.0

-260.8

-0.7%

7.4%

-262

0.5%

Pre-provision-profits

322.7

307.0

338.5

10.2%

4.9%

327

3.5%

Provisions

-246.0

-307.4

-260.6

15.2%

-5.9%

-232

-12.3%

Other results

-9

-9.0

-3.7

59.0%

57.0%

-10

63.0%

PBT

68.1

-9.4

74.2

887.2%

9.0%

85

-12.7%

Corporate taxes

8.7

1.5

23.4

1460.0%

169.0%

25

-5.1%

Net profit (continued)

59

-11

98

992.4%

64.1%

60

61.6%

 

HELLENIC PETROLEUM (Q2:20 results review): 

The company reported a weak yet expected set of Q2/H1’20 financial results with actual figures coming in at the upper end of the consensus. Adjusted EBITDA coming in at €63mn (-52% in Q2’20) vs €55mn consensus. Adjusted EBITDA in H1’20 reached €191mn. The refiner reported a net loss of €22mn on an adjusted basis. Q2’20 sales dropped 57% to €1.07bn below consensus. On a reported basis, EBITDA stood at €76mn and net income at €5mn, as the refiner booked inventory valuation gains of €26mn. 

Key Highlights of H1 performance are: 

§   Results affected by pandemic resulting a sharp drop in fuel demand globally (especially aviation) which coupled with OPEC’s decision to limit crude oil production led to unprecedented low refining margins. 

§   Gradual lifting of mobility restrictions from Q2’20 onwards led to a recovery in fuel consumption, still lagging last year level

§   High operating levels, with the production amounting to 3.7m MT, at the same levels vs 2Q19 utilizing the large storage capacity of its refineries, while, at the same time, proceeded with contango trades, avoiding excessive exposure to price risk and took advantage of the market structure to improve results from international trading.

§   The gradual recovery of crude oil and product prices, from the lows recorded in the beginning of 2Q, resulted to inventory valuation gains of €26m, partially offsetting the significant loss recorded in the 1Q20 and led Reported EBITDA to €76m.

§   Refining: Production amounted to 3.7m MT, at levels similar to last year, while sales amounted to 3.6m MT (-12%). Refining, Supply & Trading 2Q20 Adjusted EBITDA at €40m.

§   Petrochemicals: Adjusted EBITDA amounted to €16m (-43%) in the 2Q20, mainly due to weak polypropylene benchmark margins.

§   Marketing: In Domestic Marketing, the collapse of the aviation & bunkering market and the drop of demand in ground fuels, led to a significant decline in sales volumes and profitability with 2Q20 Adjusted EBITDA to €-1m. International Marketing also recorded a decrease in volumes and contribution with the Adjusted EBITDA of the 2Q20 at €10m (-30%).

§   DEPA Group contribution to 2Q20 consolidated Net Income came in at €1m. Elpedison’s EBITDA amounted to €11mn, significantly improved y-o-y, due to increased production.

§   Net Debt in Q2’20 at €1.8bn, financing cost down 15% y-o-y, gearing at 48%

§   Aspropyrgos Refinery unit upgrade will last 2.5 months commencing on August 28 with an estimated capex of €130mn including €60mn investments on safety and environment opting to reduce the refinery’s particulate emissions (PMs) by 50%. Annual savings are expected to reach €50mn annually.

§   204MW’s PV project on Northern Greece transaction expected to be completed in Q3’20 with financing finalizing by end 2020.

§   Regarding the sale procedures of DEPA Commercial and Infrastructure, in which HELLENIC PETROLEUM participates, due diligence procedures are underway.

§   The digital transformation program was officially launched with total annual EBITDA benefits expected to exceed €50mn in the next three years. 

The following table Hellenic Petroleum Q2/H1’20 financial performance (on a reported basis) vs consensus estimates: 

HELLENIC PETROLEUM

2019

2020

Y-o-Y

2020

Act. vs

2019

2020

Y-o-Y

2020

Act. vs

EUR m.

Η1

Η1

(%)

Η1

Est.

Q2

Q2

(%)

Q2 Est.

Est.

Sales

4,456.6

2,986.0

-33.0% 

3,695.0

-19.2% 

2,465.4

1,067.0

-56.7% 

1,776.0

-39.9% 

EBITDA

319.6

-341.0

-206.7% 

-316.0

-7.9% 

185.3

75.1

-59.5% 

100.1

-25.0% 

EBITDA Mrg

7.2% 

-11.4% 

-1,859 bps 

-8.6% 

-287 bps 

7.5% 

7.0% 

-48 bps 

5.6% 

+140 bps 

Net Income

121.3

-336.0

-377.0% 

-331.00

-1.5% 

74.2

3.8

-94.9% 

8.8

-56.8% 

Net Mrg

2.7% 

-11.3% 

-1,397 bps 

-9.0% 

-229 bps 

3.0% 

0.4% 

-265 bps 

0.5% 

-14 bps 

  

Kind Regards, 

Manos Chatzidakis

Head of research

29 Alexandras Avenue

11473 Athens,Greece

Tel: +30 210 6478755/754

Fax:+30 210 6410139

Email: [email protected]

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