here - Axia Ventures Group Ltd

Daily Note
AVG Research
21 November 2014
Athens General
Market Turnover (EURm)
Market Cap (EURbn)
Market Cap / GDP*
close
daily
Y-t-d
959.9
75.38
60.33
0.54%
%
4.4%
-17.45%
%
32.9%
*2014
Athens General Index
Headlines
Macroeconomic News
1,050
Press reports note that the Greek government and the troika did not reach an agreement during
yesterday’s conference call – undisclosed European official notes that Greece has another week to
finalize agreement with the troika so as to proceed with necessary decisions at the Eurogroup meeting
scheduled for December 8 – note that the 2015 budget will be tabled to parliament today without the
troika’s approval.
Fitch Rating Agency is scheduled to release its assessment of Greece’s sovereign rating today
(B/Stable).
According to the Bank of Greece, in September the current account balance showed a surplus of
EUR1.6bn, up by EUR652m y-o-y, assisted by the improved balance of goods and services, which is
mainly attributable to a significant rise in oil export receipts, as well as in travel and transport receipts.
For the January-September period, the current account balance showed a surplus of EUR3.8bn,
compared to EUR2.4bn at the same period last year.
Corporate News
Lamda Development reported a satisfactory set of Q3:14 results, in line with the performance of the
previous quarters. In the conference call that followed, management confirmed that Q4:14
performance will be similar to the strong performance of Q3:14.
1,000
950
900
850
800
20 Oct
27 Oct
03 Nov
10 Nov
17 Nov
ASE Indices & Sectors
FTSE - 20
FTSE - 40
FTSE - 140
ASE - Banks
ASE - Telecoms
ASE - Industrial
ASE - Construction
close
daily %
Y-t-d %
310.2
870.5
743.6
123.4
2548.9
2199.9
2456.9
0.5%
1.1%
0.5%
-0.1%
0.9%
0.6%
2.6%
-19.4%
-25.4%
-19.5%
-31.4%
-4.2%
-32.2%
-8.4%
FTSE ASE 20 Ratios*
Additional Headlines
2013f
2014f
12-14f
CAGR
The Ministry of Development approved yesterday the merger of Piraeus Bank and Geniki Bank by way
of absorption by the former.
P/E (x)
22.8
22.8
P/BV (x)
1.2
1.1
-5.84%
In the conference call following the release of Motor Oil’s 3Q:14 results, management commented on
the prevailing refining margins stating that margins continue to stand at high levels but in a much
more volatile market. Management also noted that the gradual but slow curtailment in refining
capacity across EU is driven by prolonged low margin periods and CAPEX intensive needs. Regarding
the company’s operations, management highlighted that the refinery has been running flat out over
the last periods posting record quarterly sales volume due to strong exports and an improving
domestic environment. Finally, crude sourcing flexibility allowed for a higher vs. benchmark refining
margins (heavy Basrah oil accounted for more than 60% in 3Q).
EV/EBITDA (x)
7.9
6.6
-16.41%
According to Energypress.gr, citing a working paper by RAE (regulatory authority), the starting price for
lignite generated electricity through NOME type auctions will be set at EUR35-38/MWh (not including
any additional charges). The final price though will vary according to the consumption profile for each
end-client. We note that this price levels are close to the ones offered by PPC (following State’s
proposal) to industrial clients earlier this year. In any case, the official study is expected to be ratified
by RAE and thereafter presented to EU DG Comp, with the first auction expected in the first quarter of
2015.
EV/Sales (x)
Dividend yield (%)
Please continue overleaf….
Weekly Calendar
Credit rating on Greece: 21/11/2014 Fitch Rating
1.0
-8.36%
1.7%
45.29%
FTSE ASE movers (last trading day)
TOP
Ellaktor SA
GEK Terna Holding Real
Estate Construction SA
FOURLIS HOLDINGS S.A.
9.4%
4.4%
3.7%
BOTTOM
SARANTIS S.A.
-3.5%
J&P-Avax S.A.
-2.5%
D.T.C.A. HYGEIA S.A.
-1.9%
Bank of Cyprus held yesterday its Annual General Meeting during which it elected a new board of
directors which will represent the new shareholder structure, following the EUR1.0bn capital raise in
August. Note that former Deutsche Bank’s Josef Ackermann and US billionaire Wilbur Ross were
appointed to the new board yesterday.
According to Euro2day, citing comments from Ministry of Infrastructure officials, two new railway
projects budgeted at EUR170m and EUR150m will be tendered within 1H:15. Both projects concern
railtrack upgrades and expansion on the Athens-Patra line.
1.1
1.2%
*consensus FactSet
Fitch Ratings affirmed National Bank of Greece's (NBG, B-/Stable/B; Viability Rating: b-) Programme II
EUR4.87bn mortgage covered bonds at 'B+' with a Stable Outlook.
According to daily Kathimerini, the preferred bidder for Greece’s regional airports will be announced
on November 25. Recall that Metka-Corporacion America, Ellaktor-Vinci and Fraport-Copelouzos
Group have been shortlisted as preferred bidders. According to the report, based on the structure of
the concession agreement the fee paid by each departing passenger will be set to EUR14.5/person in
the first stage and will be adjusted up to EUR20/person following the completion of the infrastructure
upgrades carried out by the concessionaire. According to the latest traffic data c9.5m passengers
departed from the regional airports in 2013.
-0.12%
Foreign Indices / Rates / FX
close
daily %
Y-t-d %
0.2%
6.9%
Nasdaq Composite
17719.
0
4701.9
0.6%
12.6%
S&P 500
2052.8
0.2%
11.1%
Euro STOXX
314.1
-0.5%
-0.1%
FTSE 100
6678.9
-0.3%
-1.0%
CAC40
4234.2
-0.7%
-1.4%
DAX
9484.0
0.1%
-0.7%
Austria ATX
2214.5
-0.8%
-13.0%
Russia RTS
1040.4
1.9%
-27.9%
Turkey ISE 100
82511.
9
3.0%
1.3%
21.7%
1.2%
33.1%
1.25
0.0%
-9.0%
DJ Industrial Average
10 - Year Yield (DE)
USD / EUR
Axia Ventures Group - 4 Vas. Sofias Ave., 10674 Athens Greece, Tel: +30 210 7414400, Fax: +30 210 7414449, Web: www.axiavg.com
Please refer to the last page for disclosures and analyst certification
Daily Note
Greek Economy – Troika Negotiations
Fact: Press reports note that the Greek government and the troika did not reach an agreement during yesterday’s conference call – undisclosed
European official notes that Greece has another week to finalize agreement with the troika so as to proceed with necessary decisions at the
Eurogroup meeting scheduled for December 8 – note that the 2015 budget will be tabled to parliament today without the troika’s approval.
Assessment: Note that Greek Finance Minister Gikas Hardouvelis will submit the final 2015 budget to the President of the Parliament today at
12:00am local time, without the approval of the troika on certain key issues. Press reports note that yesterday’s conference call did not result in
an agreement between the two sides. In addition, press reports note that yesterday’s conference call with the Greek government was delayed
significantly, as a result of a disagreement between IMF and EU officials relating to the stance that should be taken on Greece, with reports
noting that the IMF took a tougher position. Press reports also note that amongst other the troika is concerned that the budget will land Greece
with a much bigger fiscal gap next year than what has been presented by Greek authorities. Note that the disagreement has already delayed the
recommencement of the country's review by the troika and Greece risks missing a December 8 deadline to receive the final instalment of its
bailout from Europe. Importantly, the completion of the review would also pave the way for talks on a possible financial backstop for Greece
after the European part of its bailout expires at the end of this year.In this context, an undisclosed EU official stated that Greece has another
week to finalize the agreement with the troika, while any delays post the end of next week (November 28) could result in certain problems, while
in this context, the EU official noted that if no agreement is reached than the authorities may need to consider extending Greece’s programme
by 12 months.
Overall, negotiations will continue into next week as well as there is still sufficient time for the Greek government to reach an agreement with
troika.
Name: Constantinos Zouzoulas
e-mail: [email protected]
Phone number: +30 210 7414460
Fitch Ratings
Fact: Fitch Rating Agency is scheduled to release its assessment of Greece’s sovereign rating today (B/Stable).
Assessment: Recall that Fitch Rating Agency upgraded Greece's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'B' from 'B-'
on May 23, 2014. Recall also that the Stable Outlook reflected the rating agency’s view that upside and downside risks to the rating are currently
balanced.
Fitch Rating Agency decision to upgrade Greece’s rating on May 23, 2014, reflected amongst other, the primary surplus achieved in the general
government account in 2013, with the rating agency adding that Greece's deficit reduction over the past four years of its two programmes had
been remarkable.
Importantly, note that future developments that could individually or collectively result in Fitch taking a positive rating action for Greece include:
(i) a strong economic recovery; budgetary improvement supporting the rating agency’s baseline of a sustained primary surplus of 4% of GDP;
progress in clearing arrears; (ii) a successful programme exit, with market access at affordable rates and debt relief on official loans (OSI) on
terms that significantly improve long-term public debt dynamics.
Name: Constantinos Zouzoulas
e-mail: [email protected]
Phone number: +30 210 7414460
Greek Economy – Balance of Payments (Sep)
Fact: According to the Bank of Greece, in September the current account balance showed a surplus of EUR1.6bn, up by EUR652m y-o-y, assisted
by the improved balance of goods and services, which is mainly attributable to a significant rise in oil export receipts, as well as in travel and
transport receipts. For the Jan-Sep period, the current account balance showed a surplus of EUR3.8bn, compared with EUR2.4bn over the same
period of 2013.
Assessment: In September, the trade deficit contracted by EUR223m y-o-y, due to the lower net import bill for oil and ships. Export receipts rose
by 9.4% but the trade deficit (excluding oil and ships) grew by 11.6%.
The surplus of the services balance widened by EUR425m y-o-y, due to improvements in the travel services balance and in the transport (mainly
sea transport) services balance. Specifically, travel receipts increased by 10.9%, reflecting a 23.0% rise in non-residents’ arrivals.
The current account surplus of the Jan-Sep period is mainly attributable to the improved services balance with total exports of goods and
services rising by 8.5% (compared with 2.8% over the same period in 2013). Specifically receipts from exports of goods increased by 4.2%, while
receipts from services rose by 11.6%. The EUR2.5bn rise in the surplus of the services balance is due to higher net receipts from travel, transport
and “other” services. Specifically, travel spending by non-residents in Greece grew by 11.1% y-o-y, reflecting a 22.2% rise in non-residents’
arrivals.
Name: Constantinos Zouzoulas
AVG Research
e-mail: [email protected]
Phone number: +30 210 7414460
Page 2
Daily Note
4.26
339.5
Closing Price (EUR)
Market Cap (EUR m)
Lamda Development S.A.
Reuters / Bloomberg: MLDr.AT/LAMDA GA
Real Estate / Greece
Fact: Lamda Development reported a satisfactory set of Q3:14 results, in line with the performance of
previous quarters. Management confirmed that Q4:14 trends thus far are similar to those in Q3:14.
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Nov 13 Jan 14 Feb 14 Mar 14 May 14 Jun 14
LAMDA Development S.A.
Cons. Est.*
EV/EBITDA
P/E
P/B
EPS
*FactSet
Jul 14
Sep 14
Oct 14
ATHEX Composite (Rebased)
2013
2014f
2015f
9.9
11.6
0.74
0.51
8.1
10.2
0.73
-0.29
8.0
8.2
0.70
0.73
Assessment: The retail performance for the first nine months in 2014 showed significant growth with the
retail EBITDA up 4.9% y-o-y, settling in at EUR28.1m compared to EUR26.8m in the equivalent period last year.
The positive trend in the main retail indicators of the shopping centres remained strong, hence shopkeepers’
sales for the period were up 9% y-o-y, consumer visits increased 6.5% y-o-y and the average shopping centre’s
occupancy exceeded 98%.
Total EBITDA before valuations increased 5% y-o-y standing at EUR22.9m compared to EUR21.7m last year.
The revaluation of assets, which took place at Q2:14, impacted the P&L negatively by EUR7.2m at 9M2014
versus December 31, 2013. Note that the valuation losses for the same period last year were EUR14.62m.
The company reported net losses at 9M:14 of EUR4.67m compared to net losses of EUR25.73m at 9M:13.
The net asset value of the company as of September 30, 2014 stands at EUR455.9m compared to EUR 296.4m
at December 31, 2013. Note that the recent share capital increase in July, as well as the sale of treasury stock
resulted in a net amount of EUR163m increase to the net asset value. As a result, the net debt-to-investment
portfolio stands at 38.5%, whereas the net debt-to-NAV reached 61.8%, while Net Debt/Book Equity stands at
69.0%. Note that the NAV/share stands at EUR5.72 at September 30, 2014.
Finally, regarding the Hellinikon project, management noted that currently it is in the planning process with
the corresponding Ministries and Hellinikon S.A. Recall that Lamda Development on November 14, 2014
announced the signing of the contract for the purchase of the shares of Hellinikon SA through its subsidiary
Hellenikon Global I SA. In addition, management indicated that the approval of all the regulatory steps is
expected to take 18-24 months, before the development of the project begins.
EUR m
Revenues
Operating profit
Net Income
9M:14
9M:13
y-o-y
32.28
32.58
-0.9%
6.14
-2.29
n.m.
-4.67
-25.73
81.8%
Source: The Company, AVG Research
Action: The largest mall operator in Greece is increasingly benefiting from the stabilization of the Greek
economy. Note that the performance of the malls (shopkeepers revenues growth) is higher than that of the
market, indicating also the shift of consumer preference to shops in organized markets as well as the success
of the active management of the malls. As the Greek economy rebounds, we would expect the strong
performance of the malls to continue, while expected yield compression will result in revaluation gains.
Name: Constantinos Zouzoulas
AVG Research
e-mail: [email protected]
Phone number: +30 210 7414460
Page 3
Daily Note
Corporate and Macro Calendar
Company
Companies Earnings Announcements
Period
Date
Macros - November 2014
For the month of
Release date
Jumbo
Q1:15
24/112014
Commercial Transactions (prov data)
Sep-14
25/11/2014
Terna Energy
Q3:14
24/11/2014
Producer Price Index in Industry
Oct-14
28/11/2014
OPAP
Q3:14
25/11/2014
Fourlis
Q3:14
25/11/2014
Aegean Airlines
Q3:14
25/11/2014
Piraeus Bank
Q3:14
25/11/2014
Metka
Q3:14
26/11/2014
Rating Agency
Release date
Mytilineos
Q3:14
26/11/2014
FitchRatings
21/11/2014
Folli Follie Group
Q3:14
27/11/2014
Moody's
PPC
Q3:14
27/11/2014
Bank of Cyprus
Q3:14
27/11/2014
Company
Fact
Athens Water
Q3:14
28/11/2014
Piraeus Port Authority
AGM
25/11/2014
Thessaloniki Water
Q3:14
28/11/2014
Hellenic Petroleum
EGM
15/12/2014
AVG Research
Event
Credit rating review on Greece
28/11/2014
Corporate
Date
Page 4
Daily Note
Disclosures
General information
This research report was prepared by Axia Ventures Group Limited, a company incorporated under the laws of Cyprus (but is
referred to herein, together with its subsidiary companies and affiliates, collectively, as “Axia”) and is authorised and regulated by
the Cyprus Securities and Exchange Commission (authorisation number 086/07). Axia is authorized to provide investment services in
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provide similar services in other countries, inside or outside of the European Union, subject to the applicable provisions. Axia is not a
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Content of the report
The persons in charge of the preparation of this daily report, the names of whom are disclosed below, certify that the views and
opinions expressed on the subject security, issuer, companies or businesses covered by this research report (each a “Subject
Company” and, collectively, the “Subject Companies”) are their personal opinions and that no part of their compensation was, is or
will be directly or indirectly related to the specific recommendations or views contained in this research report.
Whilst all substantial sources of information for the research are indicated in this report, including, without limitation, bases of
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All information contained herein is subject to change at any time without notice. No member of Axia has an obligation to update,
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Persons responsible for this report: Constantinos Zouzoulas (analyst)
Key Definitions
AVG Research 12-month rating*
Buy
The stock to generate total return** of and above 10% within the next 12-months
The stock to generate total return* *between -10% and 10% within the next 12Neutral
months
Sell
The stock to generate total return* * of and below -10% within the next 12 months
Under Review
Stock’s target price or rating is subject to possible change
Applicable Laws / Regulation and AXIA Ventures Group Limited policies might
Restricted
restrict certain types of communication and investment recommendations
Not Rated
There is no rating for the company by AXIA Ventures Group Limited
* exceptions to the bands may be granted by the Investment Review Committee of Axia taking into account specific characteristics of
the Subject Company.
**total return: % price appreciation –percentage change in share price from current price to projected target price plus projected
dividend yield
AXIA Ventures Group Limited Rating Distribution as of today
Coverage Universe
Buy
Hold
Sell
Restricted
Not Rated
Under Review
Count
Percent
10
100%
Of which Investment
Banking Relationships
Count
Percent
5
50%
Daily Note
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Research
Constantinos Zouzoulas
[email protected]
+30 210 7414460
Louis Nikolopoulos
[email protected]
+30 210 7414463
Argyrios Gkonis
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+30 210 7414462
Vasilis Korakis
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