This is our BoP Greek equities briefing. We have not made many changes compared to our semi-annual one in July: we downgraded Alpha and Helex; and upgraded Eurobank. Plus, we re-visited GEK, reiterating OI and replacing its soon-to-be-delisted RES subsidiary, Terna Energy.

PPC reported Q3 results in line with expectations and guidance towards hitting E1.8bn clean EBITDA in FY 2024. But the focus was on the Investor Day held the day after (Nov 14), where management confirmed January’s RES strategy & investments and added 2027 as a target year for E2.7bn of EBITDA and E1.0 DPS (c. 8% yield at the current price). We were disappointed they did not use the event to…

Q2/H1 clean EBITDA of E0.47bn/ E0.92bn in line with management’s guidance for E1.8bn for the full year. We have the distribution business to thank for that, as it accounted for c. 45% of the total number, and 60% of the delta vs H1 2023. Management sounded upbeat while announcing a new 629MW (600MW wind) acquisition in Romania, which comes on top of the business plan communicated earlier in the year.

This note was supposed to be about Q4/FY 2023 results released on Apr 9 (Q4 PPC defined recurring EBITDA came in +13% vs our estimate). Instead, it will be about us downgrading our rating to DO NOT OWN IT (DOI) on the back of the E2bn/2GW solar deal with Mytilineos.
Why the downgrade? Because the implied cost of this deal does not make sense; it is much higher than PPC’s own installations or projects under development; it is higher than any of the recent solar projects we have seen; PPC does not need it; and it does not maximize shareholder value.

PPC provided aggressive/ambitious 2024-2026 financial targets, with 2026 EBITDA at E2.3bn (from E1.5bn pro forma in 2023), implying +15% p.a. But not that different to the previous strategy update (2021). The main difference being Enel Romania, adding E500m p.a. or 22% of group EBITDA. Greece implied EBITDA of 1.8bn in 2026 is a bit higher than previous guidance for E1.74bn. In 2030 PPC expects EBITDA will rise to E3.0bn.