What’s new? Jumbo provided the trading update for February and sales/gross margin/net income guidance for FY 2023. When management urged investors on Feb 8 not to extrapolate January’s +45% yoy sales growth into the rest of the year, we could not imagine this meant February would still grow by +35% yoy, bringing sales in the first two months of 2023 up by +40% yoy. To be fair, part of this impressive growth is due to the favorable base effect caused by several Covid-related restrictions still in place in the first two months of 2022.

With this note we provide an awkward update on the political situation in Greece, considering the deadly train crash that took place in Central Greece (Tempe) on Feb 28, killing 57 people on board.
Much like the deadly fires in Attica back in 2018 weighed on 2019 elections, contributing to the overthrowing of Syriza (Tsipras), and bringing New Democracy (Mitsotakis) to power, we believe the forthcoming elections will also be defined by this tragedy.
Conclusion: a) the political risk has heightened significantly; b) the Mitsotakis administration has lost face; c) the coalition scenario has gained ground.

ResearchGreece Greek Politics Q&A_Mar 2023

What’s new? Hellenic reported record adjusted EBITDA and net income, but its cash flow has yet to capitalize on the remarkably high, energy (war) crisis driven, refining margins witnessed in 2022. EBITDA rose 4x yoy at E1.6bn (adjusted) while net debt remained unchanged at E1.9bn. Add the slow take up on RES, and Motor Oil remains the best choice between the two Greek refineries.
Conclusion. If refining margins >$20/bbl do not show up in cash flow, we will not include them in our valuation either. In other words, we reiterate our DOI rating with our price target at E6.4 (from E5.9). Unless margins stay >$20 and working capital tuns positive (as in inflow), we do not expect cash flow to improve much in 2023. Which makes us wonder about next year’s ordinary dividend. Shares trade at 8.8x our clean, normalized, EBITDA estimate for 2024.

What’s new? Piraeus published Q4/FY 2022 results (no IFRS notes) showing super strong NII (+E100m/+30% qoq), hitting annualized adjusted RoTE of c. 12.5% (on our clean calculations). All thanks to a) the loan-deposit spread going up +E50m/+17% qoq (almost zero pass-through to deposits); and b) ECB income +E50m qoq (net of TLTRO), following ECB rate hikes.
It was the latter, combined with lower costs, that drove the +9% pre-tax beat vs our estimates. Whereas higher taxes brought the bottom-line figure in line with our clean E190m estimate (or c.E175m AT1 adjusted).
Conclusion. Neither NII, nor net ECB income will be as strong going forward. Piraeus called Q4 peak NII. Which is why they maintained c.10% RoTE guidance for 2023. And it’s also why we stick to our own c. 9% RoTE in 2023E (both in AT1 adjusted terms).

What’s new? The rather rhetorical question we raised a month ago was answered today. Q4/FY 2022 results announced came in line with our estimates in EBITDA(L) terms, but FY 2023 projected cash flow and remuneration policy are weaker compared to 2022 and our own expectations. OTE expects cash flow to go down this year (from E600m in 2022) with shareholders pocketing E425m, or E75m less than 2022, via a E250m/E175m cash dividend/buy-back combination.
Strike #3 it is. In our research note on Jan 17 (‘’Strike No. 3?’’) we described rising interest rates as Strike #1; the lower payout and changed dividend/buyback mix as Strike #2; and intensifying competition from Nova/Wind as potentially Strike #3 for the valuation of OTE. Today, the Greek incumbent attributed its -E100m/-17% lower yoy cash flow guidance to (inter alia) higher tax and flat capex. But also said it ‘expects to operate in an intensely competitive environment’.