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¢ Market Comment
General Index rose
for the third day in a row on Tuesday although some impressive gains (+2.28%)
chalked up early in the session mostly evaporated once turnover started
picking up. This – along with the 0.37 percent decline posted by the
banks index – suggests that the majority of investors are still skeptical
as geopolitical developments along with the domestic political environment
remain foggy.
Positive readings
from Alpha bank Q3 results and improving sentiment in foreign markets may
weight in today’s session despite low volumes while investors interest
may focus more on result previews (HTO, Coca Cola and Eurobank).
¢ In the Spotlight
Greece: Greece's economy is
expected to grow 0.6 percent this year, before GDP expands 2.9 percent in
2015, the Commission said on Tuesday in its Autumn Economic Forecast. Those
forecasts are unchanged from its last report in May. For 2016 it predicts
growth of 3.7 percent. Greece, which has not released seasonally-adjusted
quarterly GDP data since 2011, lost about a quarter of its economic output
during a six-year recession that has left more than 26 percent of its labor
force unemployed. The recession was deepened by budget cuts tied to the
country’s 240 billion-euro ($300 billion) bailout from the euro area
and International Monetary Fund.
“GDP growth in seasonally-adjusted terms became
positive in the second quarter this year, and a strong third quarter figure
is expected,” the Commission said in the report. “The recovery is
projected to gain strength next year. However, uncertainty over policy
implementation looks set to continue weighing on investment decisions in the
first half of 2015.” Greece’s public debt is forecast to come
down to 168.8 percent of GDP in 2015 after peaking at 175.5 percent this
year, the Commission said. The country’s budget deficit will narrow to
0.1 percent of GDP next year from 1.6 percent this year, according to the
Commission. Confirmation of Greece’s return to growth could come next
week, when the Hellenic Statistical Authority releases GDP data for the third
quarter
Greece/Shipping:
According to IOBE (Institute for Economic and Industrial Research) shipping
contributed 5.6% (EUR11.8bn/USD14.8bn) of Greek GDP in 2013, employing some
260,000 people (7.2% of total work force). Going forward, IOBE sees
shipping’s contribution rising to 10% of GDP (EUR26bn) in coming years
(550,000 employees), boosting Greek recovery.
PDMA: PDMA will auction today,
26-week T-bills amounting to €875m. Previous yield stood at 2.0%.
Coca cola (Results
9M 2014): Coca Cola will announce its Q3/9M results
tomorrow before the opening. Consensus expects Q3 figures as follows:
Sales at €1.82bn
(-5.1% y-o-y), EBIT of €201.9mn (-2.8%) and
adjusted net income of €133.1mn (-10%).
Adverse Fx, unfavourable weather conditions and weak demand in Ukrainian and
Russian market due to political crisis are the key catalysts for Q3
performance. Focus on near term outlook, FCF and developments in Russian
market.
The management will host a conference call with
financial analysts on the same day at 10:00 am Swiss time, 9:00 am London
time, 11:00 am Athens time, and 4:00 am New York time. CC details:
¡
Greek participants 00800
126 060
¡
US participants
¡
UK participants
¡
Other Intl’ participants 0044
1452 555 566
HTO (Results
9M 2014): HTO will announce its Q3/9M results
tomorrow before the opening. During Q3 HTO is expected to post an impressive
EBITDA margin improvement (37.3%) as operating costs shrink faster than the
reduction of sales. In specific Q3 Sales are expected to decelerate momentum
on positive contribution from OTEtv and flat Romania business. Mobile
revenues are expected lower by 7.5% on lower MTR in Greece. On an adjustment
basis Sales in Q3 are expected down by 4.9%. Lower personnel costs are
expected to weight on EBITDA (€368.4mn -1% on adjustment basis). One
off impact from bond buyback in July will reduce net
earnings by €17.5mn to €78.5mn.
Reported figures are not comparable with 2013. We note
that 3Q13 net profitability includes a pre-tax capital gain of €154m
relating to the sale of Globul and €6.2m profits from discontinued
operations.
OTE’s management will host a conference call at
17:00 (Greece) /15:00 (UK) /10:00 (EASTERN US) following the release, to
review the results. Focus on competition pricing, Nova bid and
dividend distribution in 2015. CC details:
¡
Greece Free Call Dial in 00800
4413 1378
¡
UK Free Call Dial in 0800
953 0329
¡
US callers dial in 1866
819 7111
¡ International
Dial In +44 (0) 1452 542 301
Alpha Bank (Results
9M 2014): Alpha bank announced a broadly in line set
of results for Q3. The 23m positive surprise in estimated net earnings is
attributed mostly to negative goodwill from Diners/Citi Transaction
(+€21.5 m). Excluding one offs and VRS cost Alpha bank posted recurring
net profits of €22m for the first time
since 1Q 2011. In the conference call management stated that a new share
capital increase is not an issue and that in 2015 the bank will return to
profitability aiming to a dividend distribution. In specifics:
§ Net
Interest Income for the nine-months period stood at Euro 1,443.2 million, is
up by 21.1% y-o-y (on a comparable basis), benefiting mostly from the ongoing
repricing of new time deposits and reduced wholesale funding costs. In Q3
2014, our net interest income stood at Euro 491.5 million up by 2.3% q-o-q,
due to the consistent repricing of new time deposits. Central Banks’
funding positively contributed q-o-q to net interest income due to lower
dependence and the phasing-in effect from the two ECB interest rate cuts of
10bps, in June and September. Lower net interest income contribution from
loans continued, however, at a declining pace, as deleveraging has decelerated.
§ Net fee
and commission income stood at Euro 295.8 million, up by 9.2% y-o-y mainly
due to an increase in foreign exchange trades, pickup of brokerage, asset
management and bancassurance products. In Q3 2014, fees were up by 1% q-o-q
to Euro 100.9 million primarily due to a rise in fees from credit cards,
letters of guarantees as well as pickup of advisory and securities
transaction fees.
§ Income
from financial operations amounted to Euro 86.4 million and other income
stood at Euro 44.4 million
§ Group
NPL ratio remained flat q-o-q at 33.6% on NPL formation of €116m vs
€158m in Q2’14. In Greece, NPL ratio stood at 35.1% (flat q-o-q).
Coverage increased by 200bps q-o-q to 60%. Business, mortgages and consumer
NPL ratio for the Group stood at 34.3%, 29.7% and 41.3% while their
provisions coverage stood at 69%, 34% and 81%, respectively.
§ Gross
Loans of the Group amounted to Euro 62.8 billion at the end of September
2014, marginally flat q-o-q, excluding the contribution of Citi acquisition
of Euro 0.4 billion, signalling deleveraging deceleration for the first
quarter since Emporiki’s acquisition. Loans balances in Greece stood at
Euro 52.3 billion, up by Euro 0.5 billion mainly due to the acquisition of
Citibank’s retail portfolio (mainly credit cards) of Euro 0.4 billion,
Alpha Bank loans in Southeastern Europe totaled 10 billion euros, up 104
million compared with the previous quarter. Deposits grew by 1.3 billion
euros in the third quarter to 43.5 billion euros, of which 37.7 billion in
Greece and 5.3 billion euros in Southeastern Europe.
§ Tangible
equity reached €8.2bn in Q3’14. CET1 ratio dropped by 38bps q-o-q
to 15.9%, with fully loaded BASEL III CET1 standing at 14.9%.
Grivalia Properties (Results 9M 2014): Grivalia
Properties’ net profit reached €36m for the nine month period of
2014 vs. net loss €2m for the respective 2013 period. In specifics:
§ Rental
income increased by 32% (€36.7m vs. €27.8m) mainly due to the
additional rental income deriving from new investments.
§ Interest
income decreased by 9% (€5.2m vs. €5.7m) due to the downward
trend in the prevailing interest rates during the period. The decrease was
partially counterbalanced by the increase in cash and cash equivalents mainly
due to the Company’s Share Capital Increase concluded on January 31st,
2014.
§ Interest
expense decreased by 6% (€1.6m vs. €1.7m) due to partial
repayment of outstanding loans.
§ Property
taxes increased by 48% (€3.1m vs. €2.1m) due to the changes in
the relevant tax regime on investment property. It is noted that the two
existing property taxes were replaced by a new uniform property tax. Property
tax for the period includes a provision which will be finalized with the tax
payment.
§ As of
September 30th, 2014 Group’s cash and short term deposits amounted to
€170m vs. €191m as at December 31st, 2013, while outstanding
loans amounted to €65m compared to €125m as at December 31st,
2013. The reduction in outstanding loans is due to the fact that on February
28th, 2014, the subsidiary Cloud Hellas Ktimatiki S.A. prepaid in full the
outstanding bond loan of €56m and was released from any liabilities.
§ As of
September 30th, 2014 Group’s NAV amounted to €843m or €8.32
per share.
§
BoD decided an interim dividend of 0.10
€/share
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Manos
Chatzidakis
Head
of research
Beta
Securities S.A.
29
Alexandras Ave.
GR
- 11473
Athens,
Greece
Tel:
+30 210 6478755 /754
Fax
+30 210 6448791
Email:
mchatzidakis@beta.gr
Disclaimer:
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