In a rather unexpected move, today the government announced another windfall tax on refineries, this time on 2023 excess earnings. The local press says the government estimates it will collect E300m from both refineries. This compares with E625m collected from the windfall tax on 2022 excess earnings (Ε358m MOH; E267m Helleniq). Assuming the formula has not changed (33% tax rate applied on 2018-2021 average pre-tax refining earnings marked up by 20%), we struggle to reconcile the E300m combined impact. This only adds to the confusion. We estimate…

Q1 2024 results point to another above mid-cycle refining margin year. Volumes, EUR/USD, opex and RES contribution are all supporting our adjusted (total) EBITDA FY24 of E1.0bn for Helleniq and E1.3bn for MOH. Which may be lower yoy but big enough to finance the ongoing earnings diversification and solid dividends.
Conclusion. Our preference for MOH has not changed. Its latest move to acquire Ellaktor’s waste management business (Helector), will be a great deal both in financial* and strategy terms. It reminds us MOH is a few steps ahead in diluting the weight of refining in EBITDA below 50%.

What’s new? Q4 refining margin, clean EBITDA and net income came in lower than what we expected. But cash flow did better thanks to lower taxes and capex. Even so, FY 2023 was the second consecutive above-mid-cycle-refining year for Helleniq. Management announced an E0.60/7.3% residual DPS/yield (we expected E0.56) on top of the E0.30 already paid.
Conclusion. To the crucial question: ‘where to from here?’ we provide the same answer: We reiterate our DO NOT OWN IT (DOI) rating with our PT at E7.6 (unchanged). We find management’s target for +40% increase in E0.88bn-E1.0bn mid-cycle EBITDA quite demanding, unless refining margins are to stay >$15/bbl.

As expected, Q2 results came in much weaker qoq, on lower refining margins and despite volume holding up quite well (local demand +5% yoy). Clean EBITDA at E164m was lower than the c. E475m booked on average in each of the last 4 quarters. Unfortunately, Helleniq does not have a naphtha reformer (like MOH) to take advantage of the huge naphtha-gasoline cracks ($35/bbl in Q2), nor a big enough RES mass (yet) to offset at least part of the weakness in refining.

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…