Greek equities are down 20% ytd … however, not everything is falling apart. We rate Grivalia Properties OWN IT and we believe…to continue reading this report contact@researchgreece.com

Greek banks recap should add c.E10bn to the average market cap (E45bn 9M). At 50%-60% velocity we estimate banks should add c. E25m to December ADV and push Q4 towards E50m (E84m in 9M) and FY at E75m. They will also contribute E2.5m in new issue fees (one off) and help EBITDA reach E4m for the quarter and E12m for the full year with the shares trading 17x EBITDA 2015. Next year should be better on ADV of E100m implying EV/EBITDA of 13x – albeit still high. We were far more generous before with ADV of E130m-E150m; our new ADV of E100m means we are lowering our EBITDA estimates by 30-35% in 2016-2017 and our net income estimates by almost 50%. New PT at E3.8 (was E4.7); we reiterate DOI rating.

OPAP announced yesterday a) it notified the Hellenic Republic of breaches of the 2000 concession agreement relating to the levy imposed on OPAP games (intending on further legal actions); b) filed an arbitration request with the London Court of International Arbitration due to changes in the VLT framework vs. the 2011 license agreement – for damages in excess of E1bn (= E3.2 per OPAP share). At the end we see there is VLT optionality either via their launch or via compensation; visibility is required; we prefer to stay on the sidelines of this litigation and we reiterate our DOI while reducing out PT to E7.2 (was E9.1) after zeroing VLTs and accommodating for a 10% levy-related sales hit.

Greek like-for-like sales growth of +1.0% in Q1/-1.0% in Q2 /-1.0% in Q3 (-1.0% in 9M) is way better than company’s implicit estimate for real GDP growth of -4.0% (Apr) or initial expectations by creditors for -2.3%. Real GDP is actually +0.4% yoy in the first nine months (nominal -0.5% yoy) ‘chewing up’ capital controls and the bank holiday imposed in the middle of the year; we up our group sales by 3.5% (+E10m) but leave our earnings estimates unchanged and in line with guidance. PT and rating unchanged implying capitalization at 10% FCFE yield. Acquisitions monitoring in line with business strategy.

Most EUR MED refineries expect strong margins to persist (Q4 so far is strong) driven by low oil prices (supply glut), crude sourcing, healthy demand, strong USD and capacity rationalization. There is no way of knowing for how long though; on balance most signs are positive: USD should remain strong ahead of higher US interest rates; oil supply will increase (Iran) unless OPEC makes a U-turn; oil demand should be solid. Thus, margins should stay high for most of 2016. For 2015 it feels safe to expect (record) adj. EBITDA of E790m for Hellenic and E585m for Motor Oil according to our models with current market caps valuing them at 4.7x and 3.3x. Share prices have rallied YTD: MOH is up 70% and Hellenic is up 17%; MOH outperformance is explained by its cash flow conversion; the cyclicality of the business is why we would own neither at current levels.