Market Comment
Greek stocks eased
on Wednesday, in subdued trading conditions as the market is entering its
traditional summer lull. General Index fell 0.10 pct to end at 1,194.78
points, off the day’s lows of 1,182.54 points. Turnover was a low
€74.4 mn. As July ends today General Index is lagging 1.6% since the
beginning of the month. Results announcements may increase selective interest
today along with some forward looking on next week’s H1 scheduled
announcements. Given the low trading activity we don’t expect
significant volatility in today’s session and market may consolidate at
current levels.
After market hours
Titan cement announce its Q2 results while Moody’s is expected to
announce its credit rating on Greece tomorrow.
Greece: Trading in
credit-default swaps tied to Greek government bonds has been reported by the
Depository Trust & Clearing Corp. for the first time since the country
undertook the biggest sovereign debt restructuring more than two years ago.
There were 74 trades covering a gross $165 million of Greek debt last week,
according to the DTCC, which runs a central registry for the market and
publishes data for the 1,000 most- traded entities. A total of 292 contracts
protecting a net $505 million of bonds are now outstanding, the data show.
Greece/Hellenic Petroleum: The EU
commission approved the sale of DESFA to Ajeri Socar under certain
conditions. The commission want the voting rights of Socar to be reduced
every time the company break EU rules. The sales is expected to be completed
by early October. Recall that Socar will pay EUR 400mn for the 66% of the
company with c. EUR212mn going to Hellenic Petroleum.
Plaisio (Results H1 2014): The
Group's turnover for the first half of 2014 amounted to € 143,291
thousand vs € 131,541 thousand in the corresponding period of 2013,
posting an increase of 8.9%. The second quarter of 2014 was the third
consecutive quarter with increase in sales. The significant improvement is
mainly attributed to the favourable product mix (private label with higher
margins) and market share increase in various market segments.
Key points:
¡
Computers and digital applications
amounted to € 82,549 thousand posting an increase of 12.6% compared to
the same period of 2013 reflecting 57.6% of total Group sales (6M 2013:
55.7%).
¡
Telephony amounted to
€ 18,014 thousand representing an increase of 6.5% compared to the same
period in 2013 and contribute 12.6% of total Group sales (6M 2013: 12.9%).
¡
Office supplies amounted to 41 754
thousand €, an increase of 4.1% over the first half of 2013,
contributing a percentage of total sales 29.1% (6M 2013: 30.5%).
¡
Service revenues amounted to €
973 thousand and other income amounted to €35
thousand.
¡
EBITDA margin is improved to all three
main segments with the highest margins in the Office Equipment and the
Telecom Equipment segments.
¡
Profit Margins remained relatively high in
second quarter with EBITDA margin at 7.34% (-20bps) and net margin at 4.37%
(+11bps)
¡
On the flip side Operational cash flows
are negative by almost € 7 m., due to the reduction of the
vendors’ balances (by almost the same amount), affecting positively
cost of sales of the goods. Flows from financing activities are also
¡
negative by roughly € 6,6 m., one
third of which is due to the decrease of the long term borrowing and the
other two thirds due to the payment of the dividend.
¡
Cash and cash equivalents on 30.06.2014
came up to € 38,4m., while banking debt is reduced to
€12.1m. Plaisio is net cash by €26.3m
¡ We note
that 2013 net
earnings
include a positive tax effect of €0.8m.
We feel confident with our FY2014 estimate for sales of
€298m, EBITDA of €26.8mn and net earnings of €17.3m as H2
traditionally accounts for 61% – 65% of sales and EBITDA.
Plaιsio
|
Results H1 2014
|
||
In
thous. euro
|
2013
|
2014
|
Δ
|
Sales
|
131,541
|
143,291
|
8.9%
|
Q2
|
62,547
|
70,494
|
12.7%
|
EBITDA
|
8,416
|
9,917
|
17.8%
|
(% Sales)
|
6.40%
|
6.92%
|
+52 bps
|
Q2
|
4,712
|
5,171
|
9.7%
|
(% Sales)
|
7.53%
|
7.34%
|
-20 bps
|
Net Income
|
5,657
|
5,800
|
2.5%
|
(%
Sales)
|
4.30%
|
4.05%
|
-25 bps
|
Q2
|
2,662
|
3,079
|
15.7%
|
(% Sales)
|
4.26%
|
4.37%
|
+11 bps
|
Hellenic Petroleum (Results H1 2014):
Hellenic Petroleum reported a weak set of results affected by
adverse refining environment. Adjusted 2Q 2014 EBITDA came at
€49m (vs €55mn consensus estimate) and
adjusted net earnings reached €-50mn (vs
€-38mn
in Q1 and -23mn consensus estimate). Despite the positive contribution of the
Elefsina refinery and the improvement of its Marketing subsidiaries’
performance, both Greek and international, Group results were negatively
affected by weak benchmark refining margins.
On reported results, operating performance and gains
from inventory valuation led Reported EBITDA, to €53m (2Q13:
-€25m), while Reported Net Results, which include €53m of
financial expenses and €48m of depreciation were also improved at
-€50m (2Q13: -€95m).
In specifics:
¡
Domestic Refining Adjusted EBITDA came at
€9m (2Q13: -€11m) as Elefsina contribution, the improved
operational performance of both Aspropyrgos and Thessaloniki refineries, as
well as cost control, with fixed opex excluding maintenance 17% lower, offset
the adverse refining environment. Total refined product sales amounted to 3.2
million tons, with exports maintained at 50% of total sales.
¡
Domestic market sales recorded a 2%
increase, improving the Group’s market shares while exports, at 1.5m
MT, remained at the same high level as a share of total sales (50%).
¡
Stronger Petchem margins vs 1Q13, cost
control and high level of vertical integration between Aspropyrgos and
Thessaloniki plants, led to a 26% profitability increase with Adjusted
EBITDA at €19m. (€17m, 1Q14).
¡
DEPA contribution to Group results at
€5m (vs €9m in 2Q13), due to weak demand from IPPs.
¡
ELPEDISON posted EBITDA at €13m
(+21% vs 2Q13).
¡ Net debt
declined to 1.625bn vs 2.333bn in Q1 (-30%) on lower working capital needs
(€3.751bn vs €4,505bn in Q1).
Overall another poor quarter in terms of profitability
despite the improvement in working capital. We don’t ignore that market
conditions remain adverse for the core business yet there is gradual and slow
improvement to refining margins in the beginning of Q3. Catalysts for the
stock are DEPA sale, increase in Med margins, stabilization in domestic
demand and Elefsina full utilization. Market has incorporated most of these
risks to current price yet we haven’t seen a related development apart
from current Med margins increase that will enhance visibility.
Sarantis (Results H1 2014): Sarantis
released its H1/Q2 2014 group results yesterday, post market close, which
came in broadly in line with our forecasts. In Q2, group recurring net
earnings remained flattish at EUR4m (vs a drop of 19% in 1Q14) indicating a
mild sequential improvement as Greece’s sound performance (sales
recovery, strong efficiency gains) was largely offset by operating margin
erosions in Poland and Romania.
The company will host a conference call today at 17:00
AST (Athens), 15:00 BST (London), 10:00 EST (New York). Conference Phone: 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
Key points:
¡
H1 group sales grew by 4% y-o-y to EUR121m
(1% above BETAe), rising 5% y-o-y to EUR122m at constant currencies.
¡
In contrast, H1 2014 group EBIT and clean
net earnings (ex-EUR0.8m one off deferred taxation linked to ASTRID
acquisition) posted declines of 3% and 7% y-o-y to EUR6.9m (vs BETAe of
EUR7.1m) and EUR5.9m (vs BETAe of EUR6.1m, respectively. This rather small
miss to our earnings forecasts call is largely attributed to lower than
expected net financial income in Q2 2014 (EUR0.2m against BETAe of EUR0.8m).
¡
Q2 group sales were up 7% y-o-y to EUR70m
(1% ahead of our estimates) thanks to a rise of 9% y-o-y to EUR41m in
international markets, driven also by a home sales increase of 4% y-o-y to
EUR29m - reversing first quarter’s negative growth trend of 3%. This
top-line rebound in Greek operations may prove a game changer, in our view,
acting as a key growth driver for the group. Recall that Greece’s April
2014 turnover index in retail trade advanced 3.9% y-o-y (+7.3% volume wise) -
the first positive growth in retail sales since June 2010.
¡
In terms of Q2 2014 sales, Greece
represented 42% of group total, while international operations 58%. Second
quarter sales in Poland and Romania posted increase of 2% and 12% y-o-y to
EUR18m and EUR10m, respectively, accounting for 26% and 14% of total.
¡
As expected, Sarantis group gross margin
remained resilient in Q2 at 49.9% courtesy of better sourcing and lower
production costs.
¡
Moving further down the P&L, Q2 group
EBITDA and EBIT rose 1% and 3% y-o-y to EUR5.6m (vs BETAe EUR5.8m) and
EUR4.7m (vs BETAe EUR4.9m), despite seasonally increased marketing (promotional)
costs to boost demand for Sarantis products. Tellingly, Q2 selling expenses
were up 11% y-o-y to EUR28m (representing 39.4% of sales against 38% in Q2
2013).
¡
Greek EBIT margin surprised positively
gaining 110bps to 13.6% pushing domestic EBIT up 14% y-o-y to EUR4m, 13%
higher vs our forecasts of EUR3.5m. On the flip side, international
operations EBIT dropped 32% y-o-y to EUR0.8m (quite lower vs BETAe of
EUR1.3m), albeit from a low base, hit by a significant margin erosion (down
to 1.9% from 3% in Q2 2013), particularly painful in the key markets of
Poland and Romania.
¡
Adjusting for EUR0.8m deferred tax linked
to ASTRID’s recent acquisition, Q2 recurring EBT fell 12% y-o-y to EUR4.4m
largely due to EUR0.3m financial expenses (compared wirth EUR0.4m net
financial income in Q2 2013).
¡
In the same vein, clean Q2 2014 net
earnigs were flattish at EUR3.9m, down 21% y-o-y to EUR3.1m at a reported
level.
Titan (Results Η1 2013): Titan
will report its 2Q/Η1 2014 results today
after the
bell.
For the 2Q period consensus estimates call for sales of €331m increased by 4.0%
on the back of strength in the US market (+13%) and Greece (+14%) that will
offset weakness in East Mediterranean region (-25%). EBITDA should reach €62m
decreased by -5.2% Finally, the Group is expected to record Net earnings of €10m vs.
€5m the year ago period. FCF generation, Co2 emission rights and
outlook for US and Egypt will be in the spotlight in the conference call
following the announcement with financial analysts (18:00pm Athens
time, 16:00 pm London time and 11:00 am New York time).
Conference call details:
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