Market Comment - Market Monitor by Manos Chatzidakis

Expectations of a deal between Greece and its creditors and European Central Bank President Mario Draghi’s statements for further support to the economy if necessary, which were well received across the eurozone, sent the Greek bourse benchmark mighty close to the 1,000-point mark on Friday. General index ended at 995.07 points, adding 3.67 percent to Thursday’s 959.85 points. 

The benchmark has therefore added a remarkable 11.71 percent on a weekly basis (best weekly performance since May 2010) while the banks index grew by almost 18 percent week-on-week. The increase in turnover was another positive element of the week’s last session. Turnover amounted to €114.7mn, the highest of the week, up from Thursday’s €75.3mn. 

Strong gains across large caps may tempt short term portfolios to lock some profits ahead of the end of the month and as main themes in the political front (Troika negotiations) remain unchanged. We note however that Q3 results may differentiate investor’s interest and keep some selective buying in specific stocks. Jumbo to announce its Q1 2014/2015 after market close while this week ends the announcement period for Q3/9M results. Other important dates are Tuesday 25^th (MSCI rebalancing) and Friday 28^th (Moody’s Credit rating review).

                                          Four day gains

FTSE-25	21/11/2014	17/11/2014	Δ(%)
ELLACTOR	2.66	2.16	23.1%
EUROBANK	0.289	0.238	21.4%
GEKTERNA	2.44	2.06	18.4%
BANK OF PIRAEUS	1.22	1.04	17.3%
HTO	9.85	8.47	16.3%
FFGROUP	28.72	24.80	15.8%
PPC	6.75	5.83	15.8%
VIOHALCO	2.38	2.06	15.5%
NBG	1.960	1.70	15.3%
HEL. EXCHANGES	6.20	5.40	14.8%
ALPHA BANK	0.56	0.50	12.9%
MIG	0.24	0.21	11.8%
MOTOR OIL	6.60	5.91	11.7%
JUMBO	10.00	9.00	11.1%
GRIVALIA	8.81	7.99	10.3%
TERNA ENERGY	2.80	2.55	9.8%
ATHENS WATER	6.99	6.38	9.6%
COCA COLA	18.64	17.15	8.7%
TITAN	20.26	18.70	8.3%
OPAP	9.80	9.05	8.3%
METKA	9.48	8.80	7.7%
HEL. PETROLEUM	4.69	4.36	7.6%
MYTILINEOS	6.120	5.70	7.4%
AEGEAN	7.24	6.77	6.9%
OLP	14.20	13.80	2.9%

¢           In the Spotlight

Greece:  Fitch Ratings retained Greece’s sovereign credit rating at ‘B’ and its outlook as stable late on Friday but warned of a downgrade should snap elections prove inconclusive or negotiations with the country’s creditors fail to result in an agreement.

Greece/Budget: Greece submitted its 2015 budget to parliament without prior sign-off from its international creditors as talks with them remained stalled. The plan sees the government posting a budget surplus before interest payments of 3 percent of gross domestic product next year, or 5.6 billion euros compared with a forecast of 2.9 percent of GDP in an earlier draft of the budget last month.

Greece/Tourism: Bank of Greece stated that tourist arrivals increased 22% y-o-y to 19m from 15.5m visitors in January-September 2014, while receipts rose by a lesser 11% y-o-y to EUR12bn. 9M 2014 US arrivals grew 29% y-o-y to 486,800 visitors, French up 27% to 1.3m, while, in contrast tourist traffic from Russia dropped 4% y-o-y to 1.2m.

ΗΤΟ:  OTE telecom has selected the Eutelsat KA-SAT to deliver new satellite broadband service to homes across Greece. The satellite broadband service will be delivered alongside OTE’s TV platform broadcast from the Eutelsat 9A satellite. The broadband service and the TV platform will share the same orbital position as KA-SAT.

PPC: The company announced that its 100% subsidiaries, ADMIE SA and HEDNO SA, signed a framework agreement for the procurement of technical support concerning Distribution Network assets. The duration of the framework agreement is 3 years, namely until 2016, with an option to extend for a further 2 years. The price to be paid by HEDNO, in its capacity as Distribution Network Operator, to ADMIE for the provision of said services, for the three-year period, amounts approximately EUR 40 million. The said agreement concerns the maintenance of the equipment of step-down Substations 150/20KV, the improvement of the existing equipment, the acceptance of new installations, the repair of failures, etc.

Bank of Cyprus: Shareholders of bailed-out Cyprus’s biggest bank have elected former Deutsche Bank chief Josef Ackermann as the new chairman. The vote on Thursday came after the Bank of Cyprus passed a European in-depth review of its finances last month. The bank had earlier bolstered its capital base by raising 1 billion euros. US billionaire Wilbur Ross, who led a group of investors in pouring tens of millions into the bank, was elected vice chairman. Russian Vladimir Strzhalkovsky stays on also as vice chairman.

Plaisio: The company holds EGM on December 16 for share buyback and refinancing of a 15m bond.

Jumbo (Q1 2014/15 results preview): Domestic L-F-L sales turn positive in fiscal Q1 2015e acting as key driver. Jumbo will release its fiscal Q1 2015 (01/07/14-30/09/14) group results today, post market close.  In specifics:

¡  Fiscal Q1 sales were up 11% y-o-y to EUR145m (figure pre-announced on October 1). With just one store rollout (Komotini-Greece) in August 2014 (thus marginal Q1 impact), this is an impressive performance, driven by a L-F-L domestic sales rebound (on consumer sentiment uptrend) and strong Cyprus and Bulgaria momentum, paving the way for a robust Q2 which makes c35% of annual sales (X-mas period).

¡  In greater detail, we forecast Greece up 7% y-o-y to EUR114m fuelled by low-single digit L-F-L sales growth (against  -1% in FY 2014a). As such, domestic operations should represent 78% of group sales in fiscal Q1 2015e compared with 81% a year ago.

¡  Meanwhile, Cyprus and Bulgaria sales are seen rising 22% and 14% y-o-y to EUR19m and EUR11m, respectively, mirroring market share gains and stronger brand awareness. Romania sales, in turn, should reach EUR1.9m (vs EUR1.4m in fiscal 4Q14 and EUR1.9m in 3Q14) following first two hypermarket launches last November (2Q14).

¡  All in all, we expect fiscal Q1 2015e foreign sales to jump 27% y-o-y to EUR32m (+18% y-o-y ex-Romania), making up nearly 22% (Cyprus 13%, Bulgaria 7% and Romania 2%) of group total from 19% last year.

¡  We expect resilient fiscal Q1 gross margins, flatish at 47.1% (still supported by favourable EUR/USD parity), looking for EBITDA and EBT growths of 13% y-o-y to EUR30.3m and EUR26.4m, respectively. In a similar fashion, we see fiscal Q1 group net earnings rising 13% y-o-y to EUR20.5m.

¡  In other news, Jumbo upcoming EGM (to be held on December 12, 2014) is expected to approve extra dividend of EUR0.18 per share for FY 2015 (through capitalisation of reserves), implying a yield of 1.8% vs current levels.  The stock trades ex-date December 23; record date December 29, 2014. Note that we see Jumbo ordinary DPS at EUR.20 for FY 2015 (yield of 2%). As a result, we look for total dividend of EUR0.38 (3.8% yield) in FY15e.