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Market Comment
Greek
stocks ended sharply lower in the ASE on Tuesday, pushing the composite index
of the market to its lowest levels since mid-October (17 sessions low). Bank
shares came under strong selling pressure as agreement between Troika and
Government seems that it will need more time and there still obstacles to be
surpassed. The composite index dropped 3.10 pct to end at 1,129.86 points,
near its day’s lows of 1,128.30 points. Turnover was a moderate 97.2
million euros.
As the
market posted a three in a row negative session today may bounce in the
opening phase. However the absence of any positive catalyst may limit the
extend of the reaction.
In the Spotlight
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Cyprus/Banking
Sector: Cypriot
banks’ reliance on Emergency Liquidity Assistance, or ELA, which is
extended by the Nicosia- based Central Bank of Cyprus, remained unchanged from
end-Sept. at EU9.9b, while dependence on ECB liquidity stood at EU1.6b, also
unchanged from Sept.
Eurobank: Eurobank
announced that the Ministry of Development and Competitiveness, approved the
increase of the share capital of the Bank through the issuance of 1,418,750,000
new ordinary shares of a nominal value of €0.30 and issue price
€0.48 each, subscribed by way of contribution in kind from the
Hellenic Financial Stability Fund (HFSF) and specifically by the contribution
of the total number of shares of the “New ΤΤ Hellenic Postbank
S.A.”, amounting to €681m. Following the above increase, the Bank's
share capital amounts to €2,590,875,059.50 and the total number of shares
to 5,814,666,865 shares, of which a) 5,469,166,865 ordinary shares with voting
rights, of a nominal value of €0.30 each and b) 345,500,000 preference
shares without voting rights, of a nominal value of €2.75 each. The
commencement date for the trading of the abovementioned 1,418,750,000 new
ordinary shares, is set for 14.11.2013. As of the same date, the sum of the
Bank’s ordinary shares trading in the ATHEX will amount to 5,469,166,865
shares while the starting price of these ordinary shares shall be established
according to the ATHEX Rulebook.
In other
news Greek Finance Ministry and Hellenic Financial Stability Fund agreed that
Eurobank’s new capital increase must take place “with market
terms” and be covered by private investors.
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Viohalco: Viohalco
AGM approved yesterday the Common Draft Terms of the Cross-border Merger of the
companies under the name “VIOHALCO Hellenic Copper and Aluminium Industry
S.A.” and “VIOHALCO”. The group’s board said Viohalco
was examining a share capital increase scheme, the issuance of bond loans and
exploiting its real estate assets. Board officials said that Viohalco would
proceed with public tenders for its Greek-listed subsidiaries if the Capital
Market Commission ruled it was obligatory. Viohalco’s shares will be
traded in the Athens Stock Exchange by Friday, 15 November. From November 22,
its shares will be traded in the Euronext market.
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PDMA: Greece on
Tuesday auctioned a three-month Treasury bill issue, raising 1.3 billion euros
from the market at a lower cost. The Public Debt Management Organization said
in a statement that the return of the issue was set at 3.90 pct, down from 3.95
pct in the previous auction of same issue on October 15, 2013.
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Titan
(Results 9M 2013): Titan announced a good set of results that stood above
consensus estimates across all lines. We point out the following:
¡
For the 9M period sales came in at EUR
888.3m, 1% above consensus estimates due to strong recovery in the USA,
resilient performance in Egypt and increased exports out of Greece. Sales
volumes were increased across all product lines posting a 9% increase in
cement, 14% increase in aggregates and 1% increase in ready-mix
¡
EBITDA reached EUR 153.6m, 4% above
consensus estimates due to better than expected performance in the USA. EBITDA
margin declined by 190bps during the 9M period. However, we point out that
during the 3Q13 EBITDA climbed at EUR 61.4m posting a 21.8% increase while
EBITDA margin was improved by c. 260bps.
¡
Net Losses for the period stood at
–EUR 14.6m vs. consensus estimates of –EUR 16.7m. For 3Q13 Net
Profit stood at EUR 7.2m vs. consensus estimates of EUR 5.1m.
¡
Operating Cash Flow stood at EUR 76m while
Net Debt settled in at EUR 594m posting a -10.9% decrease vs. the year ago
period
¡
Outlook: Environment in Greece remains
difficult since the country posted record low EBITDA margins of 6.5% during the
9M period. However, during 2014 demand in Greece will be benefited from the
beginning of works in the four (4) infrastructure roadworks that will need in
total 500,000 tons of cement. In Egypt during 2014 there may be additional
boost in demand due to infrastructure projects that will be funded by other
Gulf countries. In the USA the management expects strength in the residential
sector while the Company also took some price increases of c. $8-10/ton of
cement
¡
Competition Authorities Recommendation:
Press reports indicated that the Greek Competition Committee plans to
facilitate cement imports in Greece. It is obvious that such a development
would put further pressure to the prices of cement in the local market.
Management commented the following:
¡
This is only a recommendation and they do
not have the final draft of the document yet.
¡
In the Greek market there are three (3)
local producers and some independent importers. The problem at the moment in
the Greek market is the reduced demand and this will not be resolved with a
further opening of the market
¡
If the recommendation will be applied the
Company would expect that the imported products would be of the same quality
and will have a proper use according to European laws.
All in all
Titan announced a good set of results above consensus estimates. However, with
the shares trading at an EV/EBITDA multiple of 9.5X valuation seems full at
current levels. There are some signs of optimism for 2014 but it seems that
these developments are priced in at current levels. A short-term upside could
be justified by the recent inclusion of the stock in the MSCI Index and the
inevitable interest of more foreign houses on the stock.
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Petropoulos
(Results 9M 2013): Group announced sales for the nine months to September 30th
2013 increased by 7,6 % to € 37.9m (€35.2m in 2012). EBITDA
reached 2.32m helped by Q3 performance (€806k vs €442k in Q3
2012). Net profit after tax and minority rights was €397,000 (vs
€-2.5m losses in 2012). Company may turn around in 2013 as profit margins
improved significantly and EBITDA runs positive for third consecutive quarter.
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