8/8/14

Manos Chatzidakis: Market Comment - In the Spotlight

  Market Comment




Despite banking stocks bounce (+3.75%) the index failed to close at a positive territory in yesterday’s session although midday posted gains of +0.71%. Selling pressure on commercial and industrial large caps (FFGroup -6%, CCHB -5%, Titan -5% Jumbo -4%) kept the index negative (-0.25%) for ninth consecutive session. Results announcements didn’t help much as geopolitical tensions continued affecting investor’s psychology across all markets.  Cumulative drop of the main index reached 10.2%.
Another day of volatility and nervousness is much expected in domestic market. Short term strong oversold seems not an adequate argument for a sustainable bounce and main focus continues on developments in Russia and Ukraine.

In the Spotlight

Greece/Primary Surplus: Greek Finance Ministry stated that H1 2014 primary surplus reached EUR1.8bn, against a primary deficit of EUR1.9bn over the same period in 2013. Excluding the overdue debt repayment program, Greece ‘s primary surplus  rose to EUR2.2bn.

Greece/Athens Airport passenger traffic: Athens International Airport (AIA) July 2014 passenger traffic rose 22.2% y-o-y to 1.45m; traffic from abroad increased 21.9% y-o-y, while passengers from Greece were up 23% y-o-y. In January-July 2014 AIA total passengers advanced 18.1% y-o-y; up 19.3% 15.9% from abroad and Greece, respectively.

Greece/Imports-Exports: National Statistical Authority said that Greek imports were up 9.4% y-o-y (to EUR4.18bn) in June, excluding oil products the value of imports grew by 14.6% y-o-y. In turn, June exports increased 11.3% y-o-y (to EUR2.46bn), but down 0.9% y-o-y adjusting for oil products.

Motor Oil: The company announced that it holds 89.14% stake of Cyclon Hellas

ASE/July Stats: Net capital inflows from foreign investors in the Greek capital market for 21th consecutive month were more than outflows.  Participation of foreign investors in the total market capitalization reached 60.4% compared to 60.6% at the end of previous month decreased by 0.3%. In case the participation of HFSF capitalization was counted (€18,161.16 million or 27.3%) the participation of foreign investors amount at 43.9% compared to 43.5% at the end of previous month increased by 0.9%. Foreign investors in July made 68.4% of total turnover.

Moody's: In other news Moody’s upgraded HTO's corporate family rating (CFR) to Ba3 from B2 - stable outlook. Moody’s raised HTO’s probability of default rating (PDR) to Ba3-PD from B2-PD, while upgrading the senior unsecured ratings on the global medium-term note program (GMTN) and the global bonds issued by HTO PLC (HTO's fully and unconditionally guaranteed subsidiary) to (P)Ba3 from (P)B2 and to Ba3 from B2, respectively. The outlook on all the ratings is stable.
According to Carlos Winzer - Moody’s Senior Vice President - HTO upgrade to Ba3 reflects Greece’s sovereign ceiling which was recently upgraded, while signifying HTO’s improved liquidity risk management, higher operating performance and successful deleveraging efforts.

HTO (Results 2Q/H1 2014):  HTO announced a better than expected Q2 on strong EBITDA margins helped by deceleration of decline in Greek fixed telephony, lower operating costs (-5.6%) and lower interest expenses (46m vs 69.4m). On the other hand mobile operations rates were negative across all geographical segments posting a 7.1% drop on sales and 10.6% on EBITDA. Q2 highlights:

¡  Net Debt at €1.5bn, down 37%, or €0.9bn, from Q2’13
¡  Net income up 21%, to €69mn; EBITDA margin up 130bps
¡  Domestic market outlook is positive (decelerating contraction, base effect, lower financials) while cost cutting initiatives retain EBITDA margins at healthy levels.




ΗΤΟ
Results H1 2014 (Reported)
In thous. euro
2013*
2014
Δ
Sales
2,131,800 
1,914,300 
-10.2% 
Q2
1,168,100 
948,100 
-18.8% 
EBITDA
749,000 
673,700 
-10.1% 
(% Sales)
35.13% 
35.19% 
+6 bps  
Q2
407,200 
342,500 
-15.9% 
(% Sales)
34.86% 
36.12% 
+126 bps 
Net Income
246,600 
125,100 
-49.3% 
(% Sales)
11.57% 
6.54% 
-503 bps 
Q2
79,900 
69,300 
-13.3% 
(% Sales)
6.84% 
7.31% 
+47 bps 
*Results in 2013 include Globul subsidiary.

Coca Cola (Results 2Q/H1 2014):  CCHBC announced a broadly in line set of result in Turnover and EBITDA while missed consensus net earnings estimate by 4%. In specifics:

¡  Sales in Q2 reached 1.852bn (-5% vs Q2 2013). Volume declined by 3% in the second quarter and the first half of 2014. Established markets, which had a slow start to the year, showed a sequential improvement with 2% decline in the quarter, bringing the half year decline rate to -4%. Italy, Ireland and Switzerland showed sequential improvement, partly due to Easter falling in the second quarter. Volume in Developing markets declined by 5% in the quarter. Hungary on the other hand, demonstrated growth in nearly every category. This segment has also shown an improving trend compared to the first quarter, bringing the half-year decline rate to under 7%. Emerging market volumes, down 3% in the second quarter and 2% in the first half.
¡  Comparable EBIT amounted to €194 million in the quarter, €15 million higher than the prior period, leading to a 130bps margin expansion to 10.5%. EBIT growth realised in Developing and Established markets, compensated for the EBIT decline in Emerging markets driven by Russia and Ukraine. Overall, positive developments in currency-neutral net sales revenue per case, lower input costs and lower operating expenses more than offset the impact of unfavourable foreign exchange movements and the shortfall in volumes.
¡  Gross profit margin increased on the prior year both in Q2 and the half-year. Operating expenses as a percentage of net sales improved by 50 basis points in Q2. Comparable EBIT and EBIT margin demonstrated solid growth in Q2 compared to the first quarter and prior-year quarter, of 8 percent and 1.2 percent respectively.
¡  Profit after tax came at 134.4m while FCF in Q2 reached 172.6m (vs 137.2 in Q2 2013). Management stated that Russian market trends lead to a more cautious outlook for H2.


Coca Cola
Results H1 2014 (Reported)
In thous. euro
2013
2014
Δ
Sales
3,381,100 
3,381,100 
0.0% 
Q2
1,949,200 
2,050,000 
5.2% 
EBITDA
366,700 
350,300 
-4.5% 
(% Sales)
10.85% 
10.36% 
-49 bps 
Q2
283,400 
285,500 
0.7% 
(% Sales)
14.54% 
13.93% 
-61 bps 
Net Income
65,600 
95,100 
45.0% 
(% Sales)
1.94% 
2.81% 
+87 bps 
Q2
90,000 
134,300 
49.2% 
(% Sales)
4.62% 
6.55% 
+193 bps 

Eurobank Properties (Results 6M 2014): reported 1H14 Net Operating Profit of EUR 24.4mn vs. Net Loss of EUR 8.8mn the year ago period; Rental Income increased by 20% at EUR 22.8mn due to the new additions at the beginning of Q1; Net gains from fair value adjustments at EUR 2.4mn vs. Net losses of EUR 27.6mn the year ago period; property taxes increased by 46% at EUR 2mn due to changes in the relevant tax regime on investment property; As of 30-June-2014 Group’s NAV amounted to EUR 830mn or 8.20/share down from 8.28/share at the end of Q1 due to dividend distribution; current stock price represents a 15.85% premium vs. NAV/share price on 30-June-2014.

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