What’s new? Inspired by IMF’s recent blog, that places Greece among the 5 least affected EU countries from a full Russian gas cutoff, we outline our thoughts and arguments below as to why Greece is probably a better investment case than what is implied by the energy crisis, inflation- recession fears, and the ongoing impact from the pandemic.
Conclusion. Our base case scenario is that a) Greece can avoid a recession in 2023-2024 even if the war in Ukraine continues beyond 2022 and Russia cuts off the gas supply to Europe entirely; b) Greek banks should be net gainers from higher interest rates; c) ECB will continue to support the sovereign, lifting its chances to earn investment grade rating and d) New Democracy will win the elections whenever these take place (early or on time).
OI picks plus DOI picks at lower prices. In this context, we recommend investors own NBG, Alpha, OPAP, PPC, Jumbo and Motor Oil (our OI rated names) and consider OTE and Hellenic Exchanges below E16.0/share and E3.0/share respectively. We also reiterate our suggestions, flagged in our mid-year strategy update on June 2022 (‘War on Equities’), to switch from TEN (post M&A) and MYT to MOH and PPC; from ELPE to MOH; and from SAR and Fourlis to Jumbo.
What’s new? Piraeus Bank (CFO & IRO) held an update call with the sell-side this morning, discussing macro and banking trends. The bank painted a totally different picture than the one implied by war-energy-inflation dynamics…
What’s new? Jumbo released its trading statement for June 2022 showing accelerating sales growth rates compared to the previous month. June performance is more telling given its strong -revenge spending- comparable of last year. At least this is what Jumbo claims. At this pace, the company will beat its own guidance for full year sales growth of +2-5% yoy.
What’s new? SAR provided details on the Estee Lauder JV sale (49% stake) in a stock market filing. We talked to the company and outline the main points below.
Conclusion: Outsiders, like ourselves, can only speculate on the driving forces or intentions of the counterparties involved in the deal. We do not like the deferred portion element of the sale. But we hear SAR’s statement that there is no conditionality on the future payments.
Forecasts. We are not making any changes to our valuation or rating. But we have adjusted our estimates in 2022 to account for a) 6-month contribution of EL in H1 (most likely will be treated as discontinued operation/held for sale); b) deferred portion of sale proceeds.
What’s new? Greece has a unique ability in castrating the investment cases of state-owned infrastructure assets (monopolies or not), rendering them totally unattractive to institutional investors. The most recent victim is ADMIE Holdings, owner of 51% in IPTO, the Greek TSO. Before ADMIE Holdings, it was Piraeus Port, Athens Water and PPC.
