The recent negative recommendation from Goldman Sachs (GS) for HELLENiQ ENERGY’s stock has confirmed the concerns of many small shareholders, who were already worried about the company’s prospects. The GS report, which set a target price of €7.7 and recommended a “sell,” dealt another blow to hopes for the stock’s recovery.
Detailed Analysis of the Results
According to the results announced for the second quarter and the first half of 2024, HELLENiQ ENERGY reported adjusted EBITDA of €232 million, exceeding market expectations by about 5%. However, the adjusted net profit was only €64 million, approximately 16% lower than the expected €77 million.
GS’s analysis highlighted better-than-expected performance in the refining sector, with adjusted EBITDA reaching €179 million, thanks to higher sales volumes and stable profit margins. However, this positive development was not enough to change the overall negative outlook of the report.
In the petrochemicals sector, adjusted EBITDA stood at €16 million, while the renewable energy sector continued its positive trajectory, with adjusted EBITDA of €12 million.
Concerns About the Stock’s Future
The overall picture painted by GS for HELLENiQ ENERGY reflects concerns about the company’s ability to face market challenges, particularly in an environment of increased competition and volatility in fuel prices. Despite positive cash flows, the company faces rising capital costs, which amounted to €80 million in the second quarter. This combination of higher expenses and lower profits raises concerns about HELLENiQ ENERGY’s long-term viability and its ability to maintain its level of profitability.
Impact on Small Shareholders
Small shareholders of HELLENiQ ENERGY, who often cannot react quickly to developments, find themselves in a difficult position. GS’s recommendation to sell increases uncertainty and may cause panic among investors who cannot withstand market volatility. The potential drop in the stock price that could follow might intensify the pressure and losses for small shareholders, confirming their concerns about the future of their investment.
GS’s negative assessment of HELLENiQ ENERGY underscores the challenges the company faces in a difficult market. While the company shows some positive aspects, such as stable cash flows and growth in the renewable energy sector, the increased pressure on profit margins and rising capital costs are serious issues that cannot be ignored.
For small shareholders, the situation requires careful monitoring and possibly a reevaluation of their investment strategy, as GS’s recommendation creates a more uncertain investment environment for HELLENiQ ENERGY’s stock.
Management’s Inadequacy: HELLENiQ ENERGY CEO Intensifies Concerns About the Company’s Direction
Goldman Sachs’ negative recommendation for HELLENiQ ENERGY brought to light the concerns of many small shareholders about the company’s management and future prospects. Additionally, an article from mikrometoxos.gr, which details a recent general meeting of the company, further amplifies these concerns. During this meeting, an incident occurred that highlights the management’s inadequacy: when the power went out, the microphones remained on, revealing the CEO’s remarks.
The CEO of HELLENiQ ENERGY reportedly stated that if asked about DEPA Commercial and Elpedison, he would respond with vague comments like “we might sell something, we might buy something.” This statement, made in a closed circle but heard by all those attending online, reveals a lack of clear strategy and the uncertainty that dominates the company’s management. Furthermore, the CEO admitted that the company’s €500 million investment in Elpedison has not yielded a single euro in dividends in recent years.
Small shareholders rightfully question how the management can consider either selling or buying the 50% stake in Elpedison when it acknowledges that the partnership has not delivered the expected returns. This inconsistency in the company’s business plans heightens concerns about the management’s ability to handle investments with the necessary strategic planning.
Beyond investment issues, the CEO also addressed serious problems related to the fuel market, describing widespread illegality and gas stations selling fuel cheaper than refineries, indicating smuggling. Despite his complaints to the government, the management appears unable to effectively address these issues.
The fact that the CEO, appointed by the government, remains in his position despite the serious shortcomings that have been revealed, raises serious questions about corporate governance and the effectiveness of leadership. Small shareholders are right to doubt the decisions and direction of the company, especially at a time when HELLENiQ ENERGY’s stock price is on a downward trend compared to other similar companies on the stock exchange.
GS’s recommendation to sell the stock seems to confirm small shareholders’ fears. The company not only faces market challenges but also the unreliability of its management, which does not seem to have a clear strategy and does not take the necessary measures to protect investments and the company’s reputation.
Konstantinos Gougakis
