Daily report 30-07-2014 --- Manos Chatzidakis

       Market Comment

General Index reverted to a downward course on Tuesday, ending at 1,195.96 points after shedding 1.43 percent from Monday’s 1,213.31 points. The drop was attributed to investor concerns regarding the October ECB stress test while a second round of profit taking was witnessed in several industrial large caps.

A bounce is likely in the beginning of the session while the banking sector remains in the spotlight defining general trend for the day. After market hours Sarantis and Hellenic Petroleum announce their Q2 results while investors will also look for FED’s announcement.

      

 In the Spotlight

Greece/PPI:  The producer’s price composite index in the industrial sector (measuring both the domestic and external markets) rose by 1.1 pct in June, compared with the same month last year, after an increase of 0.6 pct recorded in June 2013, Hellenic Statistical Authority said on Tuesday. This development is attributed to a 1.5 pct increase in the domestic market producer price index and a 0.5 pct decline in the external market index. The producer price index rose 0.4 pct in June from May after a 0.1 pct decline recorded in the corresponding period last year.

Greece/Privatizations: HRADF (Greek state asset development fund) announced the winning bids for two properties in Afantou, Rhodes:

¡  M.A. Angeliades for Golf-North Afantou at EUR26.9m

¡  T.N. Aegean Sun Investments for South Afantou property at EUR15.2m (improved offer vs original bid).

The two properties cover 161.5 hectares, 136 and 25.5 respectively, of which 53 belong to a golf course which will be upgraded for 50 years down the line. Constructed buildings will not exceed 151,000 square metres. In other news, HRADF also approved the final draft of the leasing contract on regional airports.

Hellenic Petroleum (Results H1 2014): Hellenic Petroleum will report its 2Q 2014 results today after market close. Focus will be mainly to med distilling margins evolution, debt, Elefsina restart and any developments regarding DEPA sale. Consensus expects Adj. Q2 EBITDA €55.2m while adj. Net earnings (loss) will land at €-27.3m and on a reported basis €61m EBITDA and €-24m net earnings (loss) on slightly  improving refining margins y-o-y, better Petchem prices, cost cutting and increased marketing revenues due to increase in domestic demand. HELPE’s management will host a conference call at 18:00 (GR time) following the release, to review the results.

Conference Call Details:

¡  Greece Dial In +30 211 180 2000

¡  UK Dial In +44 (0) 800 368 1063

¡  US  Dial In +1 866 288 9315

Sarantis (H1/Q2 2014e group results preview): We see a moderate Q2 profit growth recovery, +6% y-o-y to €4.2m (vs -19% in 1Q14), on strong CE Europe operations and a positive home sales momentum (+3%), thanks to a more benign Greek consumer backdrop. Sarantis will publish its H1/Q2 2014 group results today, post market close, and host a conference call the following day at 17:00 AST (Athens), 15:00 BST (London), 10:00 EST (New York).

Key points:

¡  We look for H1 2014 group sales, EBIT and net profits of €120m (+4% y-o-y), €7.1m (-1% y-o-y), and €6.1m (-3% y-o-y), respectively.

¡  In Q2 terms, group sales should advance 6% y-o-y to €69m, driven by 3% home sales increase to €29m (reversing trend vs 3% y-o-y drop in Q1 2014) and market share gains in CE Europe.

¡  Tellingly, Greek April 2014 turnover index in retail trade grew by 3.9% y-o-y (up 7.3% volume wise). This is may prove a game changer, in our view, as it highlights the first positive growth in retail sales since June 2010.

¡  Turning our focus to Sarantis international operations, we forecast Q2 top-line up 8% y-o-y to €40m (+9% y-o-y on constant exchange rates).

¡  In specific, we expect a sales growth of 9% y-o-y for both Poland and Romania to €20m and €10m, respectively, accounting for 28% and 14% of group total in Q2 2014e.

¡  The group gross margin should remain resilient in Q2, edging up 10bps to 50%, indicating product mix improvements as well as better sourcing.

¡  We estimate Q2 group EBITDA 5% y-o-y higher to €5.8m, despite seasonally increased marketing (promotional) costs to boost demand for Sarantis products. As such, we forecast selling expenses to rise 8% y-o-y to €27m (representing 38.5% of sales vs 38% in Q2 2013).

¡  Going down the P&L, we forecast Q2 2014 group EBIT to advance 6% y-o-y to €4.9m against €4.6m a year earlier.

¡  More particularly, we see domestic EBIT marginally up by 1% y-o-y to €3.5m in Q2, on weakening margins (down 32bps to 12.1%).

¡  On the other hand, international operations EBIT should rise 25% y-o-y to €1.4m (albeit from a low base), triggered by higher margins (+47bps to 3.5%).

¡  In a similar fashion, we expect Q2 2014e group EBT and a net earnings to post increases of 5% and 6% y-o-y to €5.2m and €4.2m, respectively.

Conference Call Details

¡  GR +30 211 180 2000

¡  FR +33 (0) 170 918 711

¡  DE +49 (0) 69 2222 4493

¡  IT +39 06 452 36 748

¡  UK +44 (0) 800 368 1063

¡  US +1 866 288 9315

Alpha Trust-Andromeda (Results H1 2014): The fund announced its net earnings for the first half of 2014 yesterday which came at €0,590mn compared to a loss after tax of €0,017mn in the corresponding period last year. The gross revenue of the Company reached €1,153mn, mostly from portfolio positive valuation at fair value under IFRS. Portfolio performance was 5.22% since the beginning of the year, compared with  FTSE/ASE Large Cap 1.87%, FTSE/ASE MID CAP -2,98%  and General Index 4.44%.  At the end of H1 assets amounted to € 11.48 million, while the Company's portfolio is invested 100% in Greece of which 91.92% in shares, 3.09% in bonds and 4.99% is cash. NAV at the end of the H1 was € 27.49 and the stock price of €22.40 trading at a discount of 18,52%. The biggest portfolio stakes at the end of the first half were: Titan, OTE, Inform Lykos, Plaisio Computers, Quest Holdings, OPAP, Thrace Plastics, PPA, Alpha Bank And Mytilinaios.

Bank of Cyprus: CEO John Hourican stated that Bank of Cyprus aims to resume trading of its shares on the Athens and Cyprus stock exchanges in the third quarter after its 1 billion-euro capital increase.