Market Monitor - Market Comment - In the Spotlight (Manos Chatzidakis)

The Greek bourse’s banks index hit a 19-month low on Wednesday, sliding 5.06 percent and weighing on the market in yet another session of losses. Fresh decline is mostly attributed to new delays regarding Troika’s assessment which in turn put important deadlines (Eurogroup 8 December) into hazard.  

General index ended at 872.31 points, shedding 2.30 percent from Tuesday’s 892.84 points. Ellaktor fared the worst among blue chips, dropping 9.29 percent, followed by banks Alpha (down 6.74 percent), National (5.85 percent) and Piraeus (4.63 percent). In total 36 stocks registered gains, 77 showed losses and 18 remained unchanged. Turnover amounted to 97.1mn, up from Tuesday’s €71.4mn.

Sharp losses across banking stocks may give reasons for some short term bounce. The prospect of Q3 GDP announcement tomorrow and changes regarding real estate tax instalments may open a window for Troikas arrival could also improve investor’s psychology. Titan cement announces its Q3 results after the bell followed by a conference call with analysts while deputy FinMin Staikouras will present 10 month budget figures (13:00).

Greece/Private Building activity: National Statistical Authority announced that August private building activity fell 5.3% in volume, falling 19.7% in building permits. In January-August 2014 building activity dropped 6.1% in volume and 13.6% in permits.

Greece/Construction Activity: August 2014 Greek public and private building activity (measured by permits issued) shrunk 19.9% y-o-y to 868. Construction in greater Athens area down 15.3% y-o-y.

PDMA: Greece sold 1.138 billion euros of three-month treasury bills on Wednesday to roll over a maturing issue, the country's debt agency PDMA said. The T-bills were priced to yield 1.70 percent, unchanged from a previous sale in October - the lowest funding cost since January 2010, when the debt agency sold three-month treasury paper at 1.67 percent. The sale's bid-cover ratio was 2.41, down from 2.48 in the previous sale.

National Bank: The bank announced that it intends to go ahead with the sale of some of its shares in Turkish subsidiary Finansbank, alongside the latter’s share capital increase. However it will retain a 60 percent stake in the Turkish lender. The total stake to go on sale through the direct sale of shares and the share capital increase will amount to 26.9 percent. The sale of existing shares that National holds in Finansbank will range between 2.5 and 6.9 percent.

According to National’s restructuring plan submitted to the European Commission, its stake in Finansbank will be reduced to 60 percent by the end of 2015. Sources from the Greek lender explained that if investors acquire the maximum 6.9 percent of National’s shares in the Turkish bank, then the share capital increase will be contained accordingly so that third parties do not own more than a combined stake of 40 percent.

Banking Sector: European Central Bank funding to Greek banks rose 3 percent in October, Greek central bank data showed on Wednesday. ECB funding rose to 43.85 billion euros last month from 42.56 billion euros in September. Greek banks have reduced their exposure but still depend on ECB funding for liquidity. They have fully repaid the comparatively more costly emergency liquidity assistance (ELA) from the Bank of Greece.

Fourlis Holdings: According to press reports, Fourlis Holdings (IKEA franchise for Greece, Cyprus & Bulgaria + Intersport for Greece, Cyprus, Bulgaria as well as Romania & Turkey) is extending its deal with Intersport International to include the launch of Athlete’s Foot stores in Greece & Turkey. This is a positive development reflecting Fourlis’ strategic decision to enhance further its international brand portfolio home & abroad. We expect no major capex requirements, rather small impact on Fourlis Holdings P&L

Fourlis currently runs 98 Intersport stores (8 new rollouts during H1 2014). That said, Intersport H1 sales advanced 8.8% y-o-y driven by stronger L-F-L sales growth in Greece (triggered by improved consumer sentiment) and aggressive store network expansion. Fourlis sees Intersport division (leading player, sales resilience to the economic downturn) top-line rising 10% y-o-y in FY 2014e.

Titan (Q3/9M Results): The company reports Q3 results today after the close.  We expect improved performance in the quarter as Greek infrastructure projects and Exports along with US market offset Egypt weakness due to fuel shortages. Having said that group sales are expected 4.4% in the quarter. Market consensus calls for adjusted net profit of €20.5mn vs €7.2mn last year, whereas EBITDA is seen at €59.2mn vs €46mn last year. Management will host a conference call the at 18:00 Greek time. Focus on FCF generation, potential acquisitions and outlook in US and Egypt. CC details: 

Titan	Estimates  9M 2014
In thous. euro	2013	2014	Δ
Sales	851,231	887,921	4.3%
Q3	301,900	316,700	4.9%
EBITDA	146,454	148,197	1.2%
(% Sales)	17.20%	16.69%	-51 bps
Q3	58,200	59,200	1.7%
(% Sales)	19.28%	18.69%	-59 bps
Net Income	-14,599	24,308	266.5%
(% Sales)	-1.72%	2.74%	+445 bps
Q3	7,200	21,400	197.2%
(% Sales)	2.38%	6.76%	+437 bps