Market Monitor: Manos Chatzidakis

Manos Chatzidakis

9:15 π.μ. (Πριν από 1 ώρα)

    Market Comment

The early deferred tax assets euphoria at the Greek stock market wore off during the afternoon on Thursday, with gains turning into losses far greater than those observed on most other European markets. The benchmark index close to the day’s lowest point at the closing -1,087.98 points- shedding 1.63 percent from Wednesday’s 1,105.99 points. A volatile session is expected today as investors may follow foreign markets trend on thin domestic news flow.

¢           In the Spotlight

Greek bank deposits: Bank of Greece stated that Greek banks deposits by businesses and households rose to EU164.2bn in August vs EU163.2bn in July 2014.

¡  Loan balances declined by 3.7% yoy and by 0.15% m-o-m at Eur213.5 bn (-3.5% yoy on an adjusted basis for write-offs and FX changes).  Mortgages dropped by 2.7% yoy and by 0.4% m-o-m; business loans were down 3.8% yoy and flat m-o-m; and consumer loans fell by 5.7% yoy and by 0.14% m-o-m. Loans have declined by Eur4.4 bn or by 2.0% ytd

¡  Total deposits  were marginally lower, down 0.3% yoy and 0.32% lower m-o-m (Eur0.6 bn deposit outflow) at Eur178.6 bn attributable to the decline of general govt deposits by Eur1.6 bn m-o-m (we remind that govt deposits were up Eur1.4 bn m-o-m in July). Deposits have increased by Eur1.6 bn or by 0.9% ytd

¡  Private deposits increased by 1.2% yoy and by 0.6% m-o-m or Eur1.0 bn of monthly deposit inflows at Eur164.2 bn. Private deposits have increased by Eur1.0 bn ytd

Greece/Trade Deficit: July trade deficit increased 29.4% to EUR1.89bn, on rising imports and falling exports (up 19.4% adjusting for oil products). In turn, Greece’s trade deficit grew 11.3% in January-July 2014 to EUR12.41bn (+23.9% excluding oil).

More specifically, July value of import-arrivals rose to EUR4.35bn against EUR3.95bn over the same period last year, up 10.2% y-o-y (+9.4% excluding oil products). Meanwhile, the value of export-deliveries reached EUR2.46bn in July vs EUR2.49bn a year earlier, down 1.1% y-o-y (but up 1.9% ex-oil products). January to July, the value of imports amounted to EUR28.01bn, up 2.2% y-o-y (excluding oil products +8.9%). On the other hand, the value of exports dropped 4.0% to EUR15.6bn in the seven month period (ex-oil products down 2.9%).

ΗΤΟ: Reportedly HTO plans to sell real estate assets in Romania for €21.8m

Jumbo FY/Q4 2014 results review: 2014a clean net profit +4% yoy to EUR101.2m (vs BETAe EUR101.8m), +37% at a reported level, thanks to network expansion, Greek L-F-L sales improvement, solid Cyprus and stronger gross margin (+79bps to 53.1%). Jumbo released its FY/Q4 2014 (01/07/13-30/06/14) group results on September 25, post market close, coming spot in line with our estimates across all levels. Key points:

¡  Fiscal 2014 group sales advanced 8% y-o-y to EUR542m (top-line figure pre-announced on July 8)

¡  In greater detail, Greek sales rose 3% y-o-y to EUR426m, underpinned by network expansion (2 store rollouts, 52 PoS in total), thanks also to a significant L-F-L sales improvement (-0.7% y-o-y against -4.4% in fiscal 2013) reflecting a somewhat more benign economic backdrop. As such, home operations accounted for 79% of group sales in fiscal 2014 compared with 82% a year ago

¡  Meanwhile, Cyprus (Pafos new store addition raising total to 4 Pos) and Bulgaria posted increases of 23% and 18% y-o-y to EUR67m (2% above BETAe of EUR65m) and EUR40m, respectively, mirroring market share gains

¡  Romania sales, in turn, reached EUR9m (vs BETAe EUR10m) following first two hypermarket launches in November 2013 (fiscal Q2 2014)

¡  In all, this means fiscal 2014 foreign sales climbed 31% y-o-y to EUR116m, making up 21% (Cyprus 12%, Bulgaria 7% and Romania 2%) of group total from 18% last year

¡  Adjusting for EUR24m one-off items (i.e. Cyprus deposit loss in fiscal 2013), group EBITDA and EBT were both up 9% y-o-y to EUR146m and EUR130m (coming in 1% below our estimates), respectively

¡  In a similar fashion, ex-one offs, fiscal 2014 recurring net profits grew by 4% y-o-y to EUR101m (bang in line), +37% y-o-y at a reported level

¡  In Q4 (01/04/14-30/06/14) group sales increased 9% y-o-y to EUR131m, 7% y-o-y higher excluding Romania’s EUR2.7m contribution (2% of Jumbo total), coming in just short of our EUR3.4m call

¡  Domestic sales were up 3% y-o-y to EUR103m, while Cyprus and Bulgaria maintained a robust top-line growth momentum rising 32% and 15% y-o-y to EUR16m (vs BETAe EUR15m) and EUR9m (in line), respectively

¡  Group gross margin remained solid at 56.2%, slightly lower, however, vs Q4 2013 high levels of 56.7%

¡  Again adjusting for EUR4.3m Bank of Cyprus deposit loss (booked in Q4 2013) group EBITDA advanced 3% y-o-y to EUR44m (vs BETAe EUR46m). Having said that, EBITDA margin dropped to 33.8% from 35.8% a year earlier as both staff and selling expenses grew at a faster pace vs sales

¡  Q4 recurring group net earnings were up 5% y-o-y to EUR32m (in line), rising 23% y-o-y at a reported level, despite being held back by lower net financial income

¡  On a negative note, Jumbo will distribute a DPS of EUR0.18 for fiscal 2014 (implying a dividend yield of 2.4% at current price levels). This is quite disappointing given street’s much higher DPS expectations (EUR0.40 to EUR0.42). The stock trades ex-dividend fiscal 2014 on October 22; record date October 23. Dividend payment to commence on October 30. Annual General Meeting of shareholders is scheduled for October 17.

¡  2015e outlook (Jumbo trading update on September 10):

¡  Recall that fiscal 2015e got off to a pretty strong start as 2-month (July-August) group sales grew by more than 10% y-o-y (as per September 10 announcement).

¡  Since just one new store opened - Iasmos-Komotini (9,000 sq m) in August 2014 (thus marginal impact) - this is an impressive top-line performance, suggesting a strong L-F-L sales recovery in Greece, as well as higher penetration rates in Cyprus, Bulgaria and Romania, paving the way for a robust September which makes c10% of annual sales (linked to the school opening period).

Jumbo guides for fiscal 2015e group sales increase of 4%-6% y-o-y, on zero L-F-L growth in Greece. Overly cautious stance, we believe, given Jul-Aug running rates and excellent track record. In contrast, BETAe sees 2015e L-F-L home sales up 3.2% y-o-y fuelled by Greek consumer confidence uptrend. For fiscal 2015e we look for group sales, EBITDA and net earnings of EUR592m, EUR164m and EUR116m, rising 9%, 11% and 14% y-o-y, respectively.

We pencil-in 4 extra store rollouts (Jumbo guides for 5) in fiscal 2015e (1 Tripoli/Greece, 1 Polemidia/Cyprus and 2 Romania), raising its network to  71 outlets (out of which 54 in Greece, 5 in Cyprus,  8 in Bulgaria and 4 in Romania). On our forecasts, Greece should account for 76% of group sales in fiscal 2015e, with Cyprus, Bulgaria and Romania representing 14%, 7% and 3%, respectively.