Wednesday, June 01, 2022- Market Monitor- Market Comment- In the Spotlight by BETA SECURITIES

Stocks ended flat in thick volumes, on the back of the MSCI rebalancing which promoted NBG and Mytilineos to the MSCI Greece Standard. That was the biggest daily turnover in almost six and a half years.  Eventually the market’s benchmark ended the month of May with losses of 3.44%, offsetting all gains recorded over the first four months of the year.

  • General Index closed at 890.70 points, shedding 0.12% from Monday’s 891.80 points. The large-cap FTSE-25 index expanded 0.02%, ending at 2,156.90 points, whereas mid-caps contracted 0.38%. The banks index decreased 0.82%, as National dropped 3.20% and Alpha fell 0.51%, while Piraeus grabbed 0.85% and Eurobank collected 0.24%. Sarantis grew 3.85%, OPAP rose 3.27% and OTE climbed 2.85%, as Hellenic Petroleum gave up 2.65% and Titan Cement slid 2.52%. In total 56 stocks posted gains, 59 incurred losses, while 46 remained unchanged.

Market to move sideways with selective interest on fresh news from Q1:22 results and guidance for the remainder of the year from conf. calls.

¢    In the Spotlight 

GREECE/PDMA: Greece seeks to raise €625mn through the offering of 26-week Treasury-bills today Wednesday, June 1, the debt office said. Government may accept non-competitive bids of up to 30% of the initially offered amount during the auction and another 30% by Thursday, June 2. Settlement will take place Friday, June 3.

Greece/CPI: Harmonised consumer prices are expected to have risen by 10.7% in May, up from 9.1% in April according to a flash estimate from Eurostat, the statistical office of the European Union. On a monthly basis, EU-harmonised CPI is estimated at +1.2%. Euro area annual inflation is expected to be 8.1% in May 2022, up from 7.4% in April. “Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in May (39.2%, compared with 37.5% in April), followed by food, alcohol & tobacco (7.5%, compared with 6.3% in April), non-energy industrial goods (4.2%, compared with 3.8% in April) and services (3.5%, compared with 3.3% in April),” Eurostat said in a statement. Local statistical authorities are scheduled to release EU-harmonised and national headline CPI data on June 9.

 

Greece/Retail Sales: Retail sales growth remained strong in March, with turnover rising 20.2% and volumes 12.3% y-o-y, respectively, National Statistics Service of ELSTAT said. In February, the respective rises were revised slightly lower to +16.9% and 10.8%, respectively. On a monthly basis in March, retail sales were up 5.6% and 2.3% in turnover and volume terms, respectively. On a seasonally-adjusted basis, retail sales were up 2.7% and 1.8% m-o-m in turnover and volume terms.

NBG: National Bank said its board approved the demerger process for the spin-off of its merchant acquiring business and its contribution to a newly established company, NBG Pay. The completion of the demerger is subject to shareholders’ approvals by NBG and NBG Pay and the by competent authorities.

PPC: Greece and Saudi Arabia agreed on Tuesday on the main terms to set up a joint venture to lay a fiber-optic data cable that will link Europe with Asia. The East to Med data Corridor (EMC project), an undersea and land data cable, will be developed by MENA HUB, owned by Saudi Arabia’s STC and Greek telecoms and satellite applications company TTSA. Greece’s power utility Public Power Corporation and Cyprus’ telecoms operator CYTA will also hold a stake in the project, pending final corporate approvals, a Greek diplomat said, speaking on condition of anonymity. The final closing of the deal is expected by July, for the project to launch in autumn and be completed by the end of 2025, the diplomat said. Total cost is estimated at €800mn.

Eurobank: Eurobank raised €500mn on Tuesday through the issue of senior preferred, part of the Greek systemic bank’s intent to raise its total capital adequacy ratio, the such bond issuance by a Greece-based bank in 2022. The issue comes amid a turbulent period in money markets, amid rising interest rates in the Eurozone, especially after the Russian invasion of Ukraine. The coupon for new Eurobank titles topped out at 4.375%, lower than the guidance (4.5%). The previous two such issues saw yields reach 2% and 2.25%, respectively, in May and September 2021.

PPA: The company said that some 750 cruise ships expected in 2022. According to PPA, 66 percent of the cruise-ships expected have designated Piraeus as their homeport, with more cruise operators expected to follow within summer.

OPAP (Q1:22 results review):  OPAP announced a satisfactory set of Q1:22 results coming in line with our estimates. Ex-online casino performance was strong assisted by particularly strong operating cash flows of €150.3m that led net debt (incl leases) below €100m. In more detail:

§  OPAP’s revenues (GGR) in Q1:22 stood higher by 162.5% y-o-y reaching €457.2m due to retail operating fully in Q1:22 and online strong momentum. More specifically, retail estate was operational for the full quarter unlike Q1:21, albeit under restrictive measures.

§  Revenues from lottery reached €170.0m vs. €36.6m in Q1:21, higher by 364.5% y-o-y on the back of retail estate’s full operations in Q1:22. Tzoker online penetration continues to stand strong for yet another quarter reaching more than 13% in Q1:22.

§  Total betting revenues reached €152.8m vs. €82.4m in Q1:21 higher by 85.6% y-o-y supported by favourable comparables in retail and accompanied by strong online contribution.

§  VLTs revenues in Q1:22 reached €69.4m. The green pass imposition continued to take a toll on the segment’s performance, with a gradual recovery

§  recorded post the restrictions’ lift since May 1st.

§  Revenues from Instant & Passives stood at €23.5m in Q1:22 compared to €7.9m in Q1:21, higher by 198.7% y-o-y on the back of the gradual relaxation of social distancing measures and the absence of lockdowns in 2022.

§  Expectedly, revenues from Online Casino stood at €41.5m in Q1 2022 vs €47.3m in Q1:21.

§  Gross Profit from gaming operations in Q1:22 stood at €189.0m higher by 198.3% y-o-y, due to higher top line performance.

§  Payroll expense stood at €20.2m vs. €18.6m in Q1:21, up by 8.5% following the completion of the curve out and employees transfer to Stoiximan Ltd

§  from Kaizen Gaming. On a l-f-l basis, excl. Stoiximan, payroll expenses increased by 2.8% y-o-y.

§  Marketing expense increased by 45.2% at €23.3m vs. €16.0m in Q1 2021 or up by 49.2% l-f-l basis, excl. Stoiximan, in order to support retail’s return along with a busy online offering.

§  EBITDA stood at €168.8m vs. €61.3m in Q1:21 higher by 175.2% or by 259.9% l-f-l on the back of increased top line contribution along with €56.6m income related to the extension of the concession agreement.

§  Net profit in Q1:22 stood at €88.3m vs. €8.7m in Q1:21 due to increased operating profitability. On a l-f-l basis excluding one-off items, Q1:22 net profit reached €94.2m compared to losses of €3.5m in Q1:21.

§  Cash flows from operating activities in Q1:22 recorded inflows of €150.3m vs. outflows of €20.2m in Q1:21. Cash flows from investing activities in Q1 2022 amounted to an outflow of €0.6m. OPAP’s net debt at end Q1:22 at just €91.5m vs. 237m at end 2021.

AGM to be held on June 9th, with total proposed shareholders remuneration for approval at €1.40 per share. More specifically BoD poposed final dividend of € 0.50/share (x-date on 18-July-2022) with scrip optionality and a capital return of EUR 0.90/share (x-date on 29-July-2022). OPAP is the best proxy to capture a long term lucrative dividend yield with no less than 8% annual performance in the next eight years. We remain buyers in the stock.

The following table summarise results vs. our estimates:

OPAP

2021

2022

Y-o-Y

2022 (Est.)

Y-o-Y

EUR mn.

Q1

Q1

(%)

Q1

(%)

Sports Betting

82.4

152.8

85.6%

151.00

1.2%

Numerical Games

36.6

170.0

364.4%

172.50

-1.4%

Lotteries

7.9

23.5

198.7%

23.00

2.2%

VLTs

0.0

69.4

70.00

-0.9%

Online Casino

47.3

41.5

-12.4%

42.00

-1.3%

GGR

174.2

457.2

162.5% 

            459

-0.3% 

NGR

105.6

312.6

196.0% 

            300

 

EBITDA

61.3

168.8

175.4%

168.0

0.5%

EBITDA Mrg vs GGR

35.2%

36.9%

+173 bps

36.6%

+28 bps

Net Income

10.3

88.3

757.3%

88.0

0.3%

Net Mrg vs GGR

5.9%

19.3%

+1,340 bps

19.2%

+12 bps

CC Details: Wednesday June 1st 4:00pm Local GR Time

§  GR: +30 213 009 6000

§  UK: +44 (0) 800 368 1063

§  USA: +1 516 447 5632

§  INTL: +44 (0) 203 059 5872

 

KRI KRI (Q1:22 review): KRI KRI reported a set of results that came in below our estimates on the EBITDA and Net income line while sales were in line. Margin pressure both on the gross income and the EBITDA line were also there, as expected, but on a much higher basis, due to price hikes in raw mate4ril costs, increased OPEX (administrative) and higher WC requirements. In more details:

§  Sales reached €30.73mn, up by 7.6% on a yearly basis, surpassing our estimate of €30.37mn by 1.17%.

§  EBITDA amounted to €1.75mn against €4.53mn in 2021, down by 61.42%, well below our estimate for €3.43mn.

§  EBT reached €0.55mn vs €3.55mn in the respective period last year, down by 84.6%.

§  Net income deescalated to €0.45mn against €2.82mn in 2021 and €1.8mn that we were expecting.

§  In the yogurt segment total sales increased by +8.6% in value and +5.7% in volume. Export yogurt sales recorded double digit increase of +15.4%, reaching €15mn. Major boost in sales is contributed from Italy (increase + 18.8%), United Kingdom (increase + 4.2%) and other countries such as Sweden, Germany and Austria. For the 5-months period, yogurt export sales continue growing at a similar pace that exceeds +17% y-o-y. In the domestic yogurt market, sales show a slight increase of +1.4%, reaching €12.25mn. The current situation of high inflation has contributed to an overall market decline of -11.3% in volume and -6.8% in value [IRI data, Jan.-Mar. 2022]. However, some sub-categories of the market, such as children, infants and functional yogurts, in which KRI-KRI has a strong presence, exhibit high inelasticity resulting to small decline or even enhancement. Thus, the market share of KRI-KRI yogurts is now 16.9%, increased by 0.9 pp [IRI data in value, Jan.-Mar. 2022]. Besides, under the current situation, the market share of private label yogurts is strengthening, because of the shift of consumers to value for money products. This is expected to benefit KRI-KRI, as it is the largest producer for the domestic market of private label yogurts. In the 5-months period, the growth of domestic yogurt sales exceeds 6% y-o-y.

§  In the ice cream sector, where the Q1 is not representative of annual results due to high seasonality, domestic sales reached €1.93mn from €2.50m in 2021. This decrease is a result of the adverse weather conditions that prevailed in the first months of this year. Currently, the sales trend has reversed, as the weather conditions improved, allowing sales to show the positive impact from the expansion of the sales network and the launch of new products. In the 5-months period, the domestic ice cream sales increased by +8% y-o-y.

§  High input costs of materials and energy have led to a reduction in profit margins both on the gross income level and the EBITDA level. The Company has passed forward part of the inputs cost inflation to the products’ selling prices. The first cycle of price increases was completed at the end of January 2022, followed by a second cycle effective by mid-May. Lately, the increase in materials’ prices has stopped, showing stabilizing trends and some signs of de-escalation on the horizon.

§  In the current economic situation, KRI KRI aims to manage inflationary pressures in such a way as to achieve passing higher inputs cost to products prices. The expected de-escalation in input costs, no sooner than Q3:22 according to our guess, will allow profit margins to recover, leading to higher levels of profitability.

§  Kri Kri head Mr Tsinavos in an interview also warned market participants of profiteering in the industry through unjustified price hikes in raw materials and packaging, partly through artificial shortages in the market. Warnings fell on deaf ears as there has been no response on complaints about increased animal feed prices that send raw milk cost higher Mr Tsinavos added.  “The profiteering continues, there has been no intervention. There were no checks on stocks or prices. The market will find its balance by itself, because there will be a reduction in consumption,” he stated.

§  Persisting pressures on input costs coupled with inflationary pressures and high competition in the domestic yogurt market render a challenging operating environment for the company.

§  Remains OVERWEIGHT at €8.7/share. We will revisit our model and adjust our figures for the current tough operating environment and update.

The following table summarizes KRI KRI’s Q1:22 financial performance vs our estimates:

 

KRI – KRI

2021

2022

Y-o-Y

2021 Est.

Act. vs

EUR m.

Q1

Q1

(%)

FY Est.

Est.

Sales

28.6

30.7

7.6% 

30.4

1.2% 

EBITDA

4.5

1.8

-61.4% 

3.4

-49.0% 

EBITDA Mrg

-22.5% 

5.7% 

+2,819 bps 

11.3% 

-49.6%

Net Income

2.8

0.5

-84.0% 

1.79

-74.9% 

Net Mrg

9.9% 

1.5% 

-841 bps 

5.9% 

-75.2%

 

KRIKRI P&L  (€mn)

Q1’21 (A)

Q1’22 (Α)

  % chng y-o-y

Q1’22 Est

Act vs Est

Greece

14.58

14.18

-2.71%

14.32

-0.96%

% of consolidated sales

51.03%

46.14%

 

47.14%

 

International

13.88

16.28

17.33%

15.86

2.67%

% of consolidated sales

48.58%

52.98%

 

52.21%

 

Ice Cream Greece

2.50

1.93

-22.58%

2.60

-25.67%

% of consolidated sales

8.74%

6.29%

 

8.56%

 

Ice Cream International

0.87

1.28

46.86%

0.90

41.85%

% of consolidated sales

3.04%

4.15%

 

2.96%

 

Ice Cream Total

3.37

3.21

-4.64%

3.50

-8.31%

% of consolidated sales

11.78%

10.44%

 

11.52%

 

Yogurt Greece

12.08

12.25

1.39%

11.72

4.53%

% of consolidated sales

42.29%

39.85%

 

38.58%

 

Yogurt International

13.01

15.00

15.36%

14.96

0.31%

% of consolidated sales

45.54%

48.82%

 

49.24%

 

Yogurt Total

25.09

27.25

8.63%

26.67

2.16%

% of consolidated sales

87.83%

88.68%

 

87.82%

 

Other Sales

0.11

0.27

144.81%

0.20

35.31%

% of consolidated sales

0.39%

0.88%

 

0.66%

 

Consolidated Sales

28.56

30.73

7.59%

30.37

1.17%

Ice Cream Gross Profit

1.61

1.35

-15.92%

1.40

-3.41%

IC Gross Profit margin

47.79%

42.14%

-565 bps 

40.00%

+214 bps 

Yogurt Gross Profit

7.37

4.85

-34.19%

7.37

-34.22%

Yogurt Gross Profit margin

29.37%

17.79%

-1,158 bps 

27.64%

-984 bps 

Consolidated Gross Profit

8.98

6.20

-30.92%

8.77

-29.30%

Gross Profit margin

31.43%

20.18%

-1,125 bps 

28.88%

-870 bps 

Total Expenses

4.45

4.45

0.14%

5.34

-16.55%

% on sales

15.57%

14.49%

-108 bps 

17.57%

-308 bps 

EBITDA

4.53

1.75

-61.42%

3.43

-49.12%

EBITDA margin

15.85%

5.69%

-1,017 bps 

11.31%

-562 bps 

D&A

1.00

1.16

15.20%

1.11

3.89%

% over sales

3.52%

3.76%

+25 bps 

3.67%

+10 bps 

EBIT

3.52

0.59

-83.25%

2.32

-74.56%

EBIT margin

12.34%

1.92%

-1,042 bps 

7.64%

-572 bps 

Net Financials

0.02

-0.04

-278.35%

-0.02

104.52%

% on sales

0.08%

-0.14%

-22 bps 

-0.07%

-7 bps 

EBT

3.55

0.55

-84.54%

2.30

-76.15%

EBT margin

12.42%

1.78%

-1,064 bps 

7.57%

-579 bps 

Taxes

0.73

0.10

-86.27%

0.51

-80.24%

Tax Rate

20.53%

18.23%

-230 bps 

22.00%

-377 bps 

NET INCOME

2.82

0.45

-84.09%

1.79

-75.00%

Net Margin

9.87%

1.46%

-841 bps 

5.91%

-445 bps 

source: Company, BETA Securities Research estimates

 

ELLAKTOR (Q1:22 results): The Group posted net earnings of €7m after eleven loss-making quarters while on an adjusted basis (accounting for “Helpis” compensation) net profits came at €14m. Performance was satisfactory this time assisted by positive FCF in the tune of €25.9m. in more details:

 

§  Gross Profit in Q1:22 amounted to €74.9m, increased by 49.7% compared to Q1:21 (€50.1m). Selling & Administrative expenses (excluding depreciation) stood at €12.0m in Q1:22 compared to €13.3m in Q1:22, a decrease of 9.3%.

§  Comparable Q1:22 EBITDA at €67.3m (reported EBITDA €58.3m) vs €40.9m in Q1:21, an increase of 64.5%. Comparable EBITDA margin at 30.6% in Q1:22 (reported EBITDA margin 26.5%) vs 21.2% the corresponding period of last year.

§  EBIT in Q1:22 reached €30.9m compared to €13.2m in Q1:21 the corresponding period of last year.

§  Earnings Before Tax Q1:22 stood at €12m vs losses of €7.0m in Q1:21.

§  Comparable Earnings After Tax Q1:22 stood at €14m (reported EAT €7.0m) vs losses of €9.1m in Q1:21.

§  Group Net Debt fell €32m to €959m in Q1:22 (from €991m Q1:21), while excluding Moreas-related non-recourse debt, Group Corporate Net Debt also fell by €7m YTD to €571m from €579m in FY:21. Moreover, Q1:22 Operating CF improved to +€40m from +€5.5m in Q1:21 due to the higher operating profitability and more favourable WC movements, while investment CF was +€25.9m (from -€97m in Q1:21).

As per Segment:

§  Revenue in Concessions stood at €56.5m in Q1:22, increased by 40.2%, compared to revenues of €40.3m in Q1:21. The increase in revenue in Q1 2022 is attributed to the gradual recovery of traffic (ATTIKI ODOS +45% compared to the corresponding period in 2021) while compared to the first quarter of 2019 (pre-Covid period) it showed a small decrease of 6%, mainly due to bad weather conditions. Comparable EBITDA in Concessions stood at €33.3m (reported EBITDA €24.3m) in Q1:21, compared to €20.2m in Q1:21, an increase of 64.9%.

§  Revenue in Construction stood at €101.3m in Q1:22, increased by 4.7% compared to €96.5m in Q1:21, while the Group focused geographically on Greece and Romania. Construction eliminated its losses on EBITDA level (EBITDA -€9.8m in the corresponding period of 2021). AKTOR and its subsidiaries’ backlog amounted to €2.6bn. This backlog includes new projects of €44m newly signed contracts post 31.03.2022 and more than €701m of contracts that are expected to be signed. Losses before tax stood at €2.8m in Q1:22 vs to losses of €15.4m in Q1:21. Losses after tax stood at €2.8m in Q1:22 vs to losses of €16.2m in Q1:21.

§  Revenue in RES stood at €31.9m in Q1:22 compared to €32.5m in Q1:21, decreased by 1.8%, with installed capacity of 493MW and 341 GWh of energy yield in Q1:22. EBITDA in RES stood at €26.9m in Q1:22 compared to €27.6m in Q1:21, decreased by 2.7% with EBITDA margin reached to 84.3% (84.9% Q1:21). Profit before tax stood at €17.8m in Q1:22 compared to €18.4m in Q1:21 (decrease 3.3%). Profit after tax stood at €16.9m in Q1:22 compared to €17.0m in Q1:21 (decrease 0.8%).

§  Environment revenue stood at €30.9m in Q1:22 compared to €24.3m in Q1:21 increased by 27.3%, mainly due to increased waste volumes, increased prices of recyclable material and the high Day Ahead Market (DAM) prices, which compensate part of the electricity produced. EBITDA reached at €7.6m in Q1:22 compared to €4.3m in Q1:21, marking an increase of 78.0%. Profit before tax stood at €6.2m in Q1:22 compared to €2.7m in Q1:21 (increase >100%). Profit after tax stood at €4.3m compared to €4.8m in the corresponding period 2021 (decrease of 9.7%).

§  Real Estate revenue stood at €2.1m in Q1:22 compared to €1.3m in Q1:21, increased by 63%. EBITDA stood at €1.7m in Q1:22 compared to €0.9m in Q1:21 (+93%). Earnings before tax and after tax stood at €0.8m in Q1:2022 compared to loss of €0.2m in Q1:21.

On May 6 of 2022, MOTOR OIL Corinth Refineries announced it acquired the shares of ELLAKTOR corresponding to a stake of almost 30%, 29.9% to be exact from Kiloman and Greenhill at a transaction price of EUR 1.75 per share. In addition, at the same day, Reggeborgh Invest announced that it has entered in a framework agreement with MOTOR OIL with the objective to procure that ELLAKTOR sales and transfers 75% stake in all assets of a renewable segment, i.e., operating and pipeline to MOTOR OIL, subject to corporate and regulatory approvals. Reggeborgh has an option of buying back MOTOR OIL’s shares, 50% of MOTOR OIL’s shares, starting immediately for a duration of 3 years, while MOTOR OIL has an option — put option to sell 50% of the shares that they acquired to Reggeborgh Invest with an exercise period starting 2 years from the date of reannouncement and ending at 3 years of the date of the announcement. The pricing for these options were not disclosed in the relevant disclosures.  Upcoming voluntary tender offer will be addressed to all shareholders with price offer at €1.75 per share. MOTOR OIL announced as the second largest shareholder in ELLAKTOR, they have confirmed that they will not tender their shares. Offeror has declared that it will not acquire any shares until the expiration of the acceptance period. So there’s not going to be a bid in the market.

Overall a good start for the year, outlook is more optimistic as management aims to turnaround construction segment by Q3:22 which breakeven in EBITDA in Q1:22, concessions traffic are recovering and RES transaction will enhance liquidity.

ELLAKTOR

2021

2022

Y-o-Y

EUR thous.

Q1

Q1

(%)

Sales

193,021

220,200

14.1%

EBITDA

40,900

58,300

42.5%

EBITDA Mrg

21.2% 

26.5% 

+529 bps 

Net Income

-9,111

7,021

177.1%

Net Mrg

-4.7% 

3.2% 

+791 bps 

ALPHA TRUST MFMC: As of today, the 12,552 new (CR) shares of the company start trading on the Alternative Market of ATHEX following the recent share capital increase due to the Stock Option Plan, exercised by 5 executives of the company, at an issue price of €4.437 per share. Total number of listed shares at 3,114,144.

INTRALOT: As of today, the trading of the 3,724,936 own (CR) shares of the company ceases and they are cancelled from the ATHEX. On June 1, 2022, the total number of the company’s listed shares amounts to 148,536,785 (CR) shares.

VIOHALCO: FY:22 gross dividend €0.09/share vs €0.01/share in FY:21. Dividend record date June 6, dividend ex-date June 3, dividend payment June 7.

 

IKTINOS: On May 27, major shareholder and BOD member Mrs I. Haida bought 10K shares for a total consideration of €5.568K (€0.5568/share).

Kind regards,

Manos Chatzidakis

Head of research

29 Alexandras Avenue

11473 Athens,Greece

Tel: +30 210 6478988/754

Email: mchatzidakis@beta.gr

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