What’s new? Surging electricity and gasoline prices, driven by high natural gas and oil prices, have been dominating low-level / day-to-day politics in Greece ever since Russia invaded Ukraine (we hope Ukrainian people fighting for their lives and their country are not paying any attention to this).

What’s new? FY 2021 results (Apr 5) were a perfect illustration of PPC’s vertical integration (generation – supply), renewables (hydro) and regulated EBITDA (distribution) absorbing the wholesale tariff shocks caused by the RUS – UKR war conflict via abnormally high gas prices.
Conclusion: We reiterate our OI rating even if it means we are lowering our EBITDA estimates by 2%-7% in 2023-2025 to account for higher wholesale prices and for longer. Our thesis is built around PPC spending E3bn to install 5GW of solar and wind by 2026 (from 200MW in 2021) and we are happy management reiterated these targets.

What’s new? We are updating our latest assessment on PPC (Feb 3) following recent developments (war conflict in UKR and energy prices) and the share price weakness. Our initial take is included at the end of this note. We focus on the impact from the government’s latest initiatives to alleviate the high energy cost from Greek households and businesses.
Conclusion: We are not changing our valuation or estimates; we reiterate our OI and PT of E13.5: a) we do not consider the E9bn /2022-2026 business plan to be at risk; b) nor that PPC will need additional funding to implement it. If anything, recent developments have intensified authorities’ urge to diversify both the energy supply (away from Russia) and generation (away from fossil fuels). We consider the share price performance has improved the attractiveness of the investment case.

This note is about investing, not trading or event-driven ideas. We believe our OI rated stocks will outperform the market on a risk-adjusted basis in the next 12-18 months. We recommend you own OPAP, Jumbo, PPC, Alpha Bank and ADMIE. We downgrade OTE given it is trading at our target price. We assume the pandemic will be less of a risk; we consider the end of free money and elevated costs and reiterate cash flow conversion as our #1 criterion.

As per www.energypress.gr, PPC may receive a cool E1bn for disposing a 49% stake in Dedie, the electricity distributor. PPC currently owns 100% of Deddie. If confirmed it will be positive news for the shares which have upped 25% over the last month. Perhaps there is more upside in the cards. If the abovementioned sale crystalizes, at the current market cap, we would ‘value’ PPC’s electricity production and supply at an EV of E2bn; this would comprise of 1. conventional generation of 11GW of which 31% in lignite, 29% in hydro, 24% in CCGT, 16% in fuel-based and 2. electricity supply of 29 TWh. We find the abovementioned implied valuation (E2bn) perhaps a steal for equity investors, assuming…