Sarantis published H1 results showing impressive sales and EBIT growth with or without the first-time consolidation of Stella Pack. We thought the latter’s contribution would be the catalyst this year. But what really blew us away was the spectacular performance of the Beauty & Skin care segment with sales +37% yoy, reaching 92% of full year 2023 sales; and EBIT +130% yoy, reaching 93% of full year 2022 and 2023 EBIT combined! It EBIT margin catapulted to 21% from 13% the same period last year.

Sarantis published Q4 results (Mar 14) +30% above our estimates and >60% their guidance in EBIT terms; but a heavier ‘bomb’ came from 2024-2028 targets about doubling EBITDA to E120m and generating >E375m of aggregate pre-dividend cash flow, (55% of mkt cap on the day). This is without new acquisitions except for the integration of Stella Pack in 2024 (+20% of EBITDA 2023).

H1 results were strong, on foreign margin expansion reflecting higher pricing and abating energy/raw material costs. Foreign countries more than made up for the weak L4L sales and EBIT in Greece. SAR’s new management raised FY 2023 EBIT guidance by +7.5% to E43m. Keeping sales unchanged at E480m highlights this is a margin call. H1 gross margin went up +300bps compared to FY 2022 (and +200bps yoy).

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…

What’s new? Sarantis reported weak, albeit but in line with our estimates, Q4/FY 2022 results, missing Estee Lauder’s P&L contribution, and reflecting higher raw material costs, affecting mainly the home care segment. The outlook for 2023-2024 is way better, the balance sheet is strong, and the business strategy is unchanged.
Conclusion. While It is quite tempting to …