Fourlis provided 2024 guidance for retail operations during the general assembly (June 21), calling for sales/EBITDA/EBIT of E550m/E41m/E26m or +5.5%/+14.2%/+23.2% yoy. These numbers are below our estimates by 3% in sales terms and by 9%-14% in EBITDA and EBIT. Management said guidance is volume driven and conservative amid a rather tight consumption environment.

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…

In the following paragraphs we are trying to answer the following questions:
1) What is the valuation of Greek banks based on their own 2024-2026 guidance?
2) What are the key inputs/buffers?
3) What is the sensitivity to different CoE estimates?
4) What is the sensitivity to higher RoTE 2024?
5) Where do we differ and why?

Q1 results were boring. This is not necessarily bad. It means demand is holding up. It also indicates that with prices, rates, and margins at/close to the peak, chances are earnings have small upside from here. Leaving volume growth (lending, subscribers, consumption, demand) the key buffer for earnings and cash flows.
Underlying demand data (file attached) confirms our previous thesis (Nov 2023) about volume growth weighed down by inflation. However, a) value growth remains positive; b) several consumer names have been reducing prices (Jumbo, IKEA, Kri-Kri) with good elasticity results; c) the ECB just cut interest rates by 25bps; and d) Greek Q1 real GDP (+2.1% yoy) showed private consumption is solid (+2.2% yoy).
Conclusion…

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%.