Daily report 22-11-2013 ~ Naked Monk

Manos Chatzidakis <mchatzidakis@beta.gr>

22 Νοεμβρίου 2013 - 9:37 π.μ.

¢ Market Comment

Greek stocks ended slightly higher on Thursday although the composite index of the market failed to close above the 1,150 resistance level for one more session. The index rose 0.46 pct to end at 1,141.83 points, after rising as much as 1.22 pct during the session. Turnover was a strong 146.27 million euros, of which 40.2 million euros accounted for the transaction of a 6.1 pct equity stake of Metka to institutional investors through a book-building private placement procedure. Metka’s shares ended 7.19 pct lower as the transaction took place at a discount compared with Wednesday’s share closing price. We expect an uptrend session helped by positive vibes from foreign markets and increasing volumes in domestic bourse as MSCI reclassification will be completed by November 26.

Finally we note that Greek Prime Minister Antonis Samaras visits Berlin today to meet German Chancellor Angela Merkel and attend Sueddeutsche Zeitung conference.

¢ In the Spotlight

Greece/State budget 2014: Greek government submitted on Thursday the final 2014 budget draft predicting return to growth by a 0.6-percent GDP rate next year, after six years of deep recession, as troika auditors left Athens with no deal, but with "good progress" on the requirements for the release of further bailout aid to Athens. Greek economy is expected to post a first 812-million-euro primary surplus in 2013 and a 2.9- billion-euro surplus in 2014, Alternate Finance Minister Christos Staikouras said, presenting the latest key figures.

The final 2014 budget draft was submitted and is expected to be put to vote in two weeks even though Athens has not reached a deal with European Union and International Monetary Fund lenders on the next set of steps which need to be taken to meet bailout aid goals. According to Greek government sources, the two sides have still not agreed on the extent of the 2014 fiscal gap and therefore the current draft budget is expected to be revised, as inspectors express skepticism on whether all targets set for revenue collection and structural reforms are tangible. According to the budget draft, Greek debt will slightly drop to 174.8 percent of GDP in 2014 from 175.5 percent this year.

Greece/Privatizations: The official target for 2014 privatization revenues has been set at 3.56 billion euros, according to the draft budget tabled on Thursday in Parliament. This means that the sell-off revenues target for 2014 will be almost three times as high as the revenues of 1.3 billion euros to be collected this year. So far most of the revenues have been collected (956 million euros), while the takings from the sale and leaseback of 28 state buildings are expected by year-end and payment for the stake in natural gas transmission network operator DESFA – sold to Azeri company SOCAR – will be cashed in during the first half of 2014.

According to the privatizations report submitted with the draft budget, privatization fund TAIPED has 14 sell-off projects in progress, with several more expected to start soon: EYDAP, Hellenic Petroleum, Public Gas Corporation, the Kavala oil reserve, marinas, 12 ports, Athens International Airport and Hellenic Post. Since 2011 the privatization program’s revenues have come to 3.8 billion euros in nominal prices. However only 2.6 billion of that has been cashed in, with the outstanding amounts concerning the rest of the payment for the lotteries (580 million euros), DESFA (188 million), the 28 state buildings (261 million) and the cell phone network licenses (64 million), among other projects.

On Thursday TAIPED announced the completion of one more privatization project: the utilization of a property at Aghios Ioannis at Sithonia in Halkidiki, Central Macedonia. During its session yesterday the TAIPED board accepted a revised offer by Ioannis and Georgios Mentekidis amounting to 9.61 million euros.

According to TAIPED, the Mentekidis construction company is active in the property market in northern Greece, and the utilization of the above property, which covers 253,000 square meters, will require the investment of some 50 million euros, which will contribute to the upgrading of tourism in the broader region and create a considerable number of jobs.

Eurobank: According to internet articles Eurobank’s data room will open for interested strategic investors by the end of the month. Interested parties include: Fairfax, a consortium between Eaglevale –Rothchild & Third Point and Apollo

Autohellas: As of today the shares of the company are traded on the ATHEX with new par value of € 0.32 per share, and excluding the right to participate in the capital return of € 0.64 per share - through a cash payment - to the shareholders of the company.

NBG: Finansbank reported its 3Q13 bank-only net earnings as TRY124mn, indicating both a 46% q/q and y/y decline. The sharp decline at the bottom line on a quarterly basis is attributable to lower net interest income and higher trading losses registered from the derivative transactions. Finansbank’s loan book grew by 5% q/q in 3Q13. Deposits remained flat q/q, while its FX deposits grew by 9% q/q in USD terms. At the end of 9M13, its loan/deposit ratio was 110%, while its TRY loans/deposits was 145% as the bank utilized more alternative funding tools to increase its TRY loans. FX loans/FX deposits stood at 36% and the bank used its FX liquidity to create TRY liquidity by using cross-currency swaps. Quarterly NIM declined by 60bp q/q to 6.3%, while its 9M13 NIM stood at 6.74%. Accordingly, Finansbank’s net interest income declined by 4% q/q in 3Q13, while the bank registered 18% y/y growth in y-t-d terms. Finansbank’s total capital adequacy ratio was 17.7% at the end of 9M13, well above the regulatory limit of 12%. The bank posted a quarterly ROE of 6.6%, down from 12% a quarter ago. As of 9M13, Finansbank’s ROE was 11.3%.

OPAP (Results 9M 2013 – Conference Call Highlights): Following the announcement of 3Q13 results OPAP’s new management team held a conference call. Main points are the following:

¡ Management maintained FY 2013 EBITDA guidance for EUR 243m
¡ Lottery & scratch cards will be delayed and will commence operations at the end of 1Q14
¡ Management commented that they intend to have a productive cooperation with their partners in Hellenic Lotteries namely Intralot and SG; however they intend to renegotiate contract terms with Intralot and SG since some parts of the contract are not beneficial for Hellenic Lotteries (clearly referring to the 3.3% fee for the supply agreement with Intralot and SG)
¡ Previous management expected that lottery & scratch cards will contribute c. EUR 10m at EBITDA line for 2013. Despite the delays in the commencement of operations for the lottery & scratch cards the management maintained previous guidance; the EUR 10m will be generated from revenue growth initiatives and mainly the robust performance of Stihima that continues during 4Q13 supported by a relative improved economic environment
¡ VLTs: First machines will be deployed during 3Q14 while the first machines of the subcontractors should be expected early in 2015
¡ Management stated that they have a good relationship with the Greek Gaming Committee but they cannot further comment on the issue of the temporary licenses

On the negative side we point out the delays in the commencement of operations of the lottery & scratch cards (end of 1Q14). On the positive side we notice the robust performance of the land based games during H213 that will fully offset the loss of EUR 10m at EBITDA level due to the delays with the lottery & scratch cards. Negotiations with Intralot and SG may be proved beneficial for OPAP since they will lead to reduced costs of the supply agreements with the two providers assuming that they will result in further delays in the lottery & scratch cards. Investors will still be looking on the timeframe of the deployment of the VLT’s since they will generate c. 45% of Group’s GGRs for 2015.

OPAP	Results 9M 2013
*In thous. euro*	2012	2013	Δ
Sales	2,946,100	2,641,831	-10.3%
Q3	891,285	897,557	0.7%
EBITDA	499,601	174,098	-65.2%
*(% Sales)*	*16.96%*	*6.59%*	*-1,037 bps*
Q3	155,016	70,802	-54.3%
(% Sales)	17.39%	7.89%	-950 bps
Net Income	371,675	111,701	-69.9%
*(% Sales)*	*12.62%*	*4.23%*	*-839 bps*
Q3	113,629	44,388	-60.9%
(% Sales)	12.75%	4.95%	-780 bps

ELVAL (Results 9M 2013): Sales volume for the 9M period rose by 3% to 252,000 tons. The turnover fell by 2.9% to 778.9 million euro, being affected by the low aluminium market prices. Gross profit registered a marginal drop and amounted to 66.6 million euro compared to 6.8 million euro in the respective last year nine month period. EBITDA amounted to 67.8 million euro, increased by 3.3%, and consolidated earnings before taxes rose to 22.2 million euro compared to 21.0 million euro in 2012. Net results after taxes and non-controlling interest stood at profits of 2.0 million euro compared to profits of 17.5 million euro in the respective last year nine month period due to the increased taxes which arose from the recalculation of the deferred tax liability that was the consequence of an increase in the tax rate from 20% to 26% and was fully charged to the results of the nine month period on a lump-sum basis.

The earnings before taxes and depreciation of the period, the low LME price and the management of working capital resulted in positive operating cash flow maintained and amounting to 43.2 million euro. The investment expenditures made in equipment amounted to 48 million euro and primarily concern the investment plans that continued to be implemented in the plants of Oinofyta and Great Britain. The Group’s total cash outflows amounted to 8.4 million euro and net borrowing amounted to 213.7 million euro.

Other Q3 Results:

Thrace Plastics	Results 9M 2013
*In thous. euro*	2012	2013	Δ
Sales	206,677	204,465	-1.1%
Q3	69,451	70,828	2.0%
EBITDA	21,096	16,557	-21.5%
*(% Sales)*	*10.21%*	*8.10%*	*-211 bps*
Q3	6,437	5,862	-8.9%
(% Sales)	9.27%	8.28%	-99 bps
Net Income	7,279	4,273	-41.3%
*(% Sales)*	*3.52%*	*2.09%*	*-143 bps*
Q3	2,582	1,457	-43.6%
(% Sales)	3.72%	2.06%	-166 bps

Info - Quest	Results 9M 2013
*In thous. euro*	2012	2013	Δ
Sales	202,764	209,685	3.4%
Q3	67,434	68,743	1.9%
EBITDA	7,188	8,754	21.8%
*(% Sales)*	*3.55%*	*4.17%*	*+63 bps*
Q3	3,090	3,029	-2.0%
(% Sales)	4.58%	4.41%	-18 bps
Net Income	-1,917	482	125.1%
*(% Sales)*	*-0.95%*	*0.23%*	*+118 bps*
Q3	-1,497	368	124.6%
(% Sales)	-2.22%	0.54%	+276 bps

Kyriakides	Results 9M 2013
*In thous. euro*	2012	2013	Δ
Sales	26,550	28,131	6.0%
Q3	10,285	10,717	4.2%
EBITDA	7,705	10,815	40.4%
*(% Sales)*	*29.02%*	*38.45%*	*+942 bps*
Q3	2,199	4,235	92.6%
(% Sales)	21.38%	39.52%	+1,814 bps
Net Income	3,204	4,910	53.2%
*(% Sales)*	*12.07%*	*17.45%*	*+539 bps*
Q3	905	2,801	209.5%
(% Sales)	8.80%	26.14%	+1,734 bps

Flexopack	Results 9M 2013
*In thous. euro*	2012	2013	Δ
Sales	40,721	41,139	1.0%
Q3	14,079	13,779	-2.1%
EBITDA	5,675	5,787	2.0%
(% *Sales*)	*13.94%*	*14.07%*	*+13 bps*
Q3	2,124	1,847	-13.0%
(% Sales)	15.09%	13.40%	-168 bps
Net Income	2,730	1,868	-31.6%
*(% Sales)*	*6.70%*	*4.54%*	*-216 bps*
Q3	1,103	800	-27.5%
(% Sales)	7.83%	5.81%	-203 bps