What’s new? Jumbo released its trading statement for August 2022 showing accelerating sales growth rates compared to the previous two summer months (June-July). We calculate it would take -7% sales growth in the remaining 4 months of 2022 to confirm management’s upper guidance for +2%-5% FY 2022 sales growth yoy. But we expect the strong tourist season has put more money in the pockets of consumers than previously expected. And this should help them endure the inflation/energy crisis.

What’s new? Motor Oil and Hellenic Petroleum reported astonishingly strong Q2 results, with their adjusted EBITDA at E500m (each) and free cash flow at E300m (MOH) to E500m (Hellenic). The outstanding performance is attributed to the remarkable refining margins recorded in Q2 ($22/bbl for MOH and $26/bbl for Hellenic), driven by solid demand, the short squeeze caused by sanctions to Russian oil products, and the stronger dollar vs the euro. Increased contribution from power and gas segments was quite notable.
Nevertheless, investors should not expect big, special, dividends out of 2022 refining earnings. Hellenic will be paying 50% of the proceeds coming from the sale of DEPA Infrastructure (completed today) but will not be sharing its record refining earnings. Both companies want to deleverage their balance sheets and invest in renewables, which is the sector chosen to diversify away from refining.
We expect renewables to be the differentiating factor once the refining outlook normalizes. For this reason and because of MOH’s leaner structure, better cash flow management, naphtha reformer economics, and more attractive valuation, we rate MOH with an OI and (continue to) prefer it over Hellenic (DOI).

What’s new? OPAP released Q2 results showing clean GGR/EBITDA/net income at E442m/E170m/E96m or +12%/+19%/+38% yoy with equity cash flow at E14m. The latter includes the E100m outflow relating to Stoiximan earn-out but was still enough to push net debt a bit further down to E30m. We believe the yoy and qoq trend is affected by lockdowns (mainly VLTs) last year and revenge spending in Q1 this year. Therefore, still difficult to assess the trend. That said, we see signs of slowing spending on gaming in Q2, explained by inflation and energy costs biting disposable income.
Lotteries were probably down on fewer Joker jack-pots while the betting sport calendar was poorer in Q2 vs Q1. The weaker macro and a different mix between offline/online performance is the reason why FY GGR guidance will be hard to meet while EBITDA guidance will be at the low end or marginally lower (E720m-E740m). The E0.30 interim DPS announced (from E0.10 interim last year) confirms the merits of Owning (OI) the stock.

What’s new? Bank of Cyprus announced on Friday it has rejected three consecutive cash offer proposals from private equity Lone Star, with the highest one at E1.51 per share, valuing the bank at E674m or 0.40x TBV actual Q1 2022/FY 2022E. BoC’s board rejected the offers as fundamentally undervaluing the bank, and strongly urged shareholders to take no action at this time. Reportedly, Lone Star has until Sep 30 to make an official offering directly to BoC’s shareholders.
Conclusion. We expect M&A speculation to prevail in the short-term trading of the stock and until it becomes clear whether Lone Star (or a counterbidder) will make an official offer. On our 2024-2025 TBV/RoTE/CoE estimates, BoC’s equity is worth E2.08 – E2.19 per share or an implied 0.63x – 0.69x TBV 2024-2025. We reinstate our Price Target at E2.1 (middle of the E2.08-E2.19 price range) and upgrade our rating to OI.
If we incorporate the full impact on NII from higher interest rates, as per BoC guidance, valuation rises to E2.69 per share and the implied P/TBV at 0.83x 2024E. As we noted in our latest Q2 Wrap Up research note on Greek banks, we have a strong conviction that, under our base case scenario assumptions, BoC has no reason to trade below the average 0.43x P/TBV 2023E of its Greek peers or even below the 0.50x-0.54x P/TBV 2023 of best NPE/CET1 positioned Eurobank and NBG.
What should shareholders do? If you believe BoC’s RoTE will not exceed 5% by 2024 you are better off selling at any price close to E1.5 per share. Our base case scenario is that BoC’s RoTE will reach 7.5% in 2024 and rise to 8.3% in 2025; both below management guidance for >10% RoTE 2024, driven by the c. 30% uplift in NII (starting in 2023) from higher interest rates.

What’s new? Greek Banks have reported Q2 results and have -finally- published their IFRS reports. In this note we summarize the most notable points. Banks trade at 0.46x TBV 2022 on our estimates. Next year is less predictable and banks are not providing any guidance whatsoever. What should investors do? If you are relaxed about 2023 go with NBG and Piraeus Bank. If, like us, you prefer to be on the safe side, stick with NBG.
Conclusion. Just when banks have brought down NPE ratios to single-digit levels (securitizations), can afford to lend (RWA/capital wise) and are looking more and more like banks again…stagflation/macro/energy crises overhang is weighing down on their valuation, preventing their P/TBV from re-rating.
We are keeping only NBG with an OI rating thanks to its high coverage/high FL CET1. If stagflation concerns abate, NPEs prove manageable and NII goes up on higher interest rates, you should also consider Piraeus and Bank of Cyprus, which offer the biggest risk-reward upside under such a scenario. Eurobank and Alpha have further upside from current levels, but not big enough to compensate investors for the risk involved, in our view.