Market Monitor - by Manos Chatzidakis

The optimism generated on Tuesday by the assurances of the finance minister as well as market rumours of a credit rating upgrade either by Fitch on Friday or Moody’s next week led to a major rebound at the local bourse that saw rising stocks outnumber decliners by a ratio of three-to-one. Turnover also showed a significant improvement.

General index ended at 916.19 points, adding 3.90 percent to Monday’s 881.76 points. Banks outperformed as their sectoral index climbed 4.98 percent while accounting for two-thirds of trading volume. Turnover amounted to €88.4mn, dwarfing Monday’s 34.4 million.

Despite yesterday’s optimism main issues in regards with Troika agreement are still in standstill mode which may be reconsidered by investors and moderate momentum.

FinMin Hardouvelis meets deputy PM Venizelos at 10:00am while Motor oil reports Q3/9M results after the bell.

¢           In the Spotlight

Greece: Greek talks with its euro area, IMF creditors are currently going through a transitional phase in which tempers fraying on all sides, Finance Minister Gikas Hardouvelis told reporters yesterday.

Athens Water: Athens Water could expand beyond Attica region according to a draft bill that allows the merge with municipality owned sewage and water supply networks.

Aegean Airlines: Aegean announced on Tuesday it is adding 16 new destinations in 10 new countries to its network next summer, reaching a total of 134 destinations, 34 domestic and 100 abroad in 42 countries.

The airline’s network will as of next year add Helsinki in Finland, Toulouse, Deauville and Metz in France, Naples and Pisa in Italy, Malta, Kuwait, Amsterdam in the Netherlands, Paphos in Cyprus, Riyadh in Saudi Arabia, Tallinn in Estonia, Oslo in Norway, Tehran in Iran, Dubrovnik in Croatia and Yerevan in Armenia. Aegean will also increase its flights from major markets for Greek tourism such as Britain, Germany, Switzerland, France and Italy, and to popular island destinations such as Naxos, Milos and Paros.

The 2015 schedule of Greece’s main carrier will offer 15 million seats, up 2 million from 2014, as its summer schedule has evolved into a stronger one than initially planned, with more new destinations, given that the growth prospects of the company appear particularly positive.Up to next summer the airline is expected to hire 250 people, while it has hired 247 people since the absorption of Olympic Air last year.

Jumbo (Results Q1 2014/2015): Jumbo will release its fiscal Q1 2015 (01/07/14-30/09/14) group results on November 24 post market close. 

Recall that Q1 group sales (figure pre-announced on October 1) increased by 10.92% y-o-y to EUR145.5m from EUR131.2m a year earlier, driven by L-F-L sales rebound Greece (reflecting stronger consumer sentiment), as well as double digit growth rates in Cyprus and Bulgaria (higher penetration & enhanced brand awareness).

Despite some mild gross margin erosion (down 53bps to 46.7% linked to USD appreciation over EURO adversely affecting Chinese purchases), we see Jumbo fiscal EBITDA, EBT and net earnings rising 12%, 13% and 14% y-o-y to EUR30.1m, EUR26.4m and EUR20.5m, respectively.

For fiscal 2015 (to June 30) we look for group sales, EBITDA, EBT and net earnings of EUR593m, EUR160m, EUR145m and EUR113m, rising 9%, 10%, 11% and 12% y-o-y, respectively.

Jumbo currently trades 11.2x its 2015e EPS, 6.9x EV/EBITDA, while offering 15% ROE and EUR159m net cash position (end-fiscal 2015), on our estimates.

Motor Oil (Results 9M/Q3 2014): Motor oil reports its Q3 earnings today after market hours, followed by a conference call on Thursday.  We expect Motor oil’s refining division to show an improved operating performance in 3Q:14 compared to 2Q:14 aided by better refining margin while domestic market is peeking up on strong tourism and stabilizing automotive fuels demand. In specifics:

¡  Motor oil continues to run flat out its refinery capacity exceeding nominal capacity keeping exports above 60% mark. However lower prices in fuel oil may settle turnover lower at €2.1bn levels (vs €2.5bn in Q3 2013).

¡  Motor oil’s refinery margin is expected to reach 9 $/bbl in Q3 vs 3.8$.bbl in Q2 and 6$/bbl in 2013Q3. Having said that we expect Q3 “clean” EBITDA to reach €115m (vs €82m in Q3 2013) while estimated inventory losses should settle at €50m.

¡  Clean Net Earnings are seen at €56m vs €30m a year ago.

¡  Refining outlook is improving as benchmark margins momentum is positive in Q4. Despite sharp oil drop in spot prices and inventory losses we expect positive impact on working capital and better FCF while heating oil demand is seen improving in the first two months of the quarter helping marketing revenues.

¡  Conference call focus on deleveraging, Cyclon/Avin integration, refining margins evolution and near term outlook for domestic market.

Dial up details (20 Nov. 17:30 GR Time):

¡  GRE participants             00800 4413 1378

¡  GBR participants            0800 953 0329

¡  US participants               1866 819 7111

¡  Other Intern. participants     + 44 (0) 1452 542 301

Hygeia (Results 9M/Q3 2014): Reported consolidated results for the period are not directly comparable to the results of the previous corresponding period, given that the impact from the unilateral, on the part of the Greek state, decisions regarding the rebate and claw-back mechanisms had not been included in the relevant period in 2013.

¡  Reported group revenue for 9H 2014 reached €163.8, as opposed to €169.8m in 9H 2013. Comparative consolidated revenue for 9M 2014 (i.e. without taking into account the rebate and claw-back impact) increased by 2.8% and amounted to €174.5m, as opposed to €169.8m for the corresponding period last year.

¡  EBITDA for 9H 2014 amounted to earnings of €10m, compared to earnings of €14.7m for the same period last year. Comparative consolidated EBITDA for 9M 2014 (i.e. without taking into account the rebate and claw-back impact) increased by 40.6%, amounting to €20.7m, as opposed to earnings of €14.7m for the corresponding period in 2013.

¡  Reported consolidated results after taxes from continuing operations recorded losses of -€11.3m, compared to losses of -€11.1m for the same period in 2013. Comparative consolidated results after taxes from continuing operations for 9M 2014 (i.e. without taking into account the rebate and claw-back impact) improved significantly and amounted to losses of -€ 2.1m, as opposed to losses of -€11.1m for the corresponding period in 2013.

Hygeia	Results 9M 2014
In thous. euro	2013	2014	Δ
Sales	172,790	174,523	1.0%
Q3	49,558	52,967	6.9%
EBITDA	14,073	10,021	-28.8%
(% Sales)	8.14%	5.74%	-240 bps
Q3	-1,080	-249	76.9%
(% Sales)	-2.18%	-0.47%	+171 bps
Net Income	-15,420	-11,354	26.4%
(% Sales)	-8.92%	-6.51%	+242 bps
Q3	-7,855	-5,751	26.8%
(% Sales)	-15.85%	-10.86%	+499 bps