MOH Q2 results were much stronger than what benchmark refining margins implied for the quarter. This is thanks to stronger gasoline vol & cracks and the higher naphtha-gasoline spread compared to Q1. The latter is not in benchmark margins (or Helleniq).

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%.

2023 was the second consecutive year with ref margin >$18/bbl, EUR/USD below 1.10 and vol @ 13.4m tn or higher. MOH generated EBITDA of E1.48bn o/w E1.18bn from refining. Still, Q4 EBITDA was below our estimate by -15%/E63m on -14% lower vol and $2/bbl lower margin (gasoline crack).
But FY cash flow of E496m was in line with our estimates, on lower working capital and taxes. This is a 16.6% yield against market cap. MOH announced a record E1.8 DPS (RGe E1.7) on a 25% payout, implying a 6.6% yield on current market cap (incl. E0.40 interim).

Q3 was impressive, with the 9M adjusted EBITDA (E1.1bn) at 90% of our FY 2023 estimate. Refining margin of $22/bbl x 3.9m tn x 1.09 EUR/USD pushed clean EBITDA at E538m in Q3, higher than E155m in Q2 (lower margin, lower vol), but even higher than E447m in Q1. Jet, gasoline, and diesel cracks rebounded back to Q1 levels with the naphtha reformer leading to higher gasoline production. Equity cash flow at E488m/E745m in Q3/9M pushed net debt significantly lower at E1.2bn (from E1.8bn in Q4 2022).