Daily Note Headlines 19 November 2014

Daily Note
AVG Research
19 November 2014
Athens General
Market Turnover (EURm)
Market Cap (EURbn)
Market Cap / GDP*
daily
Y-t-d
916.2
%
3.90%
%
-21.20%
88.99
147.5%
58.21
31.8%
*2014
Headlines
close
Athens General Index
Macroeconomic News
1,050
1,000
As troika ups pressure on Greece, the coalition government, through the Vice President Evangelos Venizelos, assured that
reforms will continue, while there will be no additional austerity measures. Evangelos Venizelos also suggested that the main
opposition party Syriza show responsibility in these negotiations, while daily Kathimerini notes that the PM Antonis Samaras and
Evangelos Venizelos are contemplating a meeting with Syriza head, Alexis Tsipras – According to press, the international lenders’
reduced the estimated fiscal gap for the target for 2015 from EUR3.6bn to approximately half - According to press, the
government proceeds to submit the final draft of the 2015 budget by Friday.
950
900
850
800
17 Oct
24 Oct
Corporate News
31 Oct
07 Nov
14 Nov
ASE Indices & Sectors
Motor Oil will announce 3Q:14 results today after the closing of the market. The company will host a conference call tomorrow at
17:30 local time (15:30 UK time).
Additional Headlines
Hygeia group released its 9M:14 results with reported revenues standing at EUR163.8m (vs. EUR169.8m in 9M:13), while
adjusting for rebate and claw-back mechanisms revenues stood at EUR174.5m (+2.8% y-o-y). Reported EBITDA stood at EUR10m
(vs. EUR14.7m in 9M:13), while adj. EBITDA stands at EUR20.7m (+40.6% y-o-y). Finally, the group reported net losses of
EUR11.3m (vs. losses of EUR11.1m in 9M:13), or losses of EUR2.1m on an adjusted basis.
Aegean Airlines announced that it is adding 16 new destinations in 10 new countries to its network next summer, reaching a total
of 134 destinations, 34 domestic and 100 abroad in 42 countries. The airline’s network will add Helsinki in Finland, Toulouse,
Deauville and Metz in France, Naples and Pisa in Italy, Malta, Kuwait, Amsterdam in the Netherlands, Paphos in Cyprus, Riyadh in
Saudi Arabia, Tallinn in Estonia, Oslo in Norway, Tehran in Iran, Dubrovnik in Croatia and Yerevan in Armenia. Aegean will also
increase its flights from major markets for Greek tourism such as Britain, Germany, Switzerland, France and Italy, and to popular
island destinations. The 2015 schedule will offer 15mn seats, up 2mn from 2014, as its summer schedule has evolved into a
stronger one than initially planned, with more new destinations, given that the growth prospects of the company appear
particularly positive.
Following the submission of the relevant legislation, EYDAP (Athens Water and Sewage Company) will now be able to acquire or
obtain management of municipal entities operating water and sewage applications beyond Athens. EYDAP will be able to sign
management agreements with municipal entities across Greece, while the required investments will be undertaken by the local
municipalities since EYDAP will only hold the operational management. In the case that EYDAP acquires the operations of a
municipal entity according to the legislation it will not be obliged to proceed with investments unless it receives a fair return on
them. This was expected by the company and will be one of the key operational drivers in the coming years.
HELEX will hold its EGM today to approve the following: (i) an increase of the share capital by capitalizing the untaxed reserves
amounting to EUR 55.7m; (ii) a reduction of the share capital of the company in order to offset losses by writing off losses from
the “Retained earnings” account via a reduction in the share par value; and (iii) electing new BoD members. Importantly, note
that the above measures are technical in nature and aim to increase the equity efficiency of the company to the benefit of
shareholders through future distribution of dividends and share capital from 2015 onwards.
Moody's has upgraded to B3 from Caa1 the ratings of the covered bonds issued under Bank of Cyprus' Covered Bond Programme
(Cypriot Pool). The rating action was prompted by the upgrade of the deposit rating of the issuer Bank of Cyprus.
Reportedly (Kathimerini), citing Israeli firms, the reserve estimate for the Aphrodite natural gas field off the coast of Cyprus has
been raised by 12%, and most of the gas is likely to be exported. The new estimate given for the natural gas field is 4.54 trillion
cubic feet (tcf). The estimate for condensate, a liquid byproduct of natural gas, was also raised to 9 million barrels from a previous
estimate of 8.1 million, two Israeli firms said in a statement to the Tel Aviv Stock Exchange on Tuesday. Delek Drilling and Avner
Oil Exploration, both subsidiaries of Israel’s Delek Group, each own 15% of Aphrodite, while Texas-based Noble Energy controls
the rest.
According to Imerisia, the Greek government will submit to parliament in the coming days a Ministry of Infrastructure bill that
provides the ‘green’ light for the completion of the privatization of Trainose and maintenance company Rosco. Under the
legislation, the new owner of Trainose will receive a EUR50m subsidy per annum in order to maintain lower revenue generating
routes, while in other related legislative provisions, Trainose will have the ability to assign the maintenance of railway equipment
for 10 years.
Carlsberg’s local brewer (Mythos) will merge with Greek beer-maker Olympic Brewery and Carlsberg will hold a 51-percent share
in the new company. According to Carlsberg officials, the two breweries combined would hold a market share of about 29% in
Greece. Carlsberg already fully owns the Mythos Brewery, Greece's third-largest. Carlsberg CEO Joergen Buhl Rasmussen said that
the merger would make it "a strong number two player" in Greece, after the Heineken-owned Athenian Brewery. No financial
information was provided on the deal, which is subject to Greek regulatory approvals.
Please continue overleaf….
Weekly Calendar
FTSE - 20
FTSE - 40
FTSE - 140
ASE - Banks
ASE - Telecoms
ASE - Industrial
ASE - Construction
close
daily %
Y-t-d %
296.2
848.7
711.1
116.5
2463.6
2153.9
2251.2
4.1%
2.0%
4.0%
5.0%
5.7%
3.1%
2.4%
-23.0%
-27.3%
-23.0%
-35.2%
-7.4%
-33.6%
-16.1%
FTSE ASE 20 Ratios*
2013f
2014f
21.7
1.2
7.7
1.1
1.2%
21.5
1.1
6.4
1.0
1.8%
P/E (x)
P/BV (x)
EV/EBITDA (x)
EV/Sales (x)
Dividend yield (%)
12-14f
CAGR
-0.57%
-5.88%
-16.38%
-8.45%
45.37%
*consensus FactSet
FTSE ASE movers (last trading day)
TOP
Public Power Corporation
EurobankS.A.
Ergasias SA
Ellaktor SA
9.1%
7.6%
6.9%
BOTTOM
SARANTIS S.A.
Forthnet S.A.
Titan Cement Co. SA
-0.3%
0.0%
0.5%
Foreign Indices / Rates / FX
DJ Industrial Average
Nasdaq Composite
S&P 500
Euro STOXX
FTSE 100
CAC40
DAX
Austria ATX
Russia RTS
Turkey ISE 100
10 - Year Yield (DE)
USD / EUR
close
daily %
Y-t-d %
17687.
8
4702.4
0.2%
0.7%
0.5%
1.1%
0.6%
0.9%
1.6%
1.4%
1.7%
1.0%
6.7%
12.6%
11.0%
0.3%
-0.6%
-0.8%
-1.0%
-12.5%
-29.2%
20.0%
1.2%
0.6%
33.1%
-9.1%
2051.8
315.4
6709.1
4262.4
9456.5
2228.5
1020.8
81329.
9
3.0%
1.25
Macros: 19/11/2014 - Turnover Index in Industry (Sep-14)
Credit rating on Greece: 21/11/2014 Fitch Ratings
Earnings announcements: 19/11/2014 - Geniki Bank, 20/11/2014 - Lamda Development
Corporate: 19/11/2014 - Hellenic Exchanges (AGM), 20/11/2014 - Bank of Cyprus (AGM)
Axia Ventures Group - 4 Vas. Sofias Ave., 10674 Athens Greece, Tel: +30 210 7414400, Fax: +30 210 7414449, Web: www.axiavg.com
Please refer to the last page for disclosures and analyst certification
Daily Note
Greek Economy – Troika Negotiations
Fact: As troika ups pressure on Greece, the coalition government, through the Vice President Evangelos Venizelos, assured that reforms will
continue, while there will be no additional austerity measures. Evangelos Venizelos also suggested that the main opposition party Syriza show
responsibility in these negotiations, while daily Kathimerini notes that the PM Antonis Samaras and Evangelos Venizelos are contemplating a
meeting with Syriza head, Alexis Tsipras – According to press, in a teleconference between troika and Greek government officials, the
international lenders’ reduced the estimated fiscal gap for the target for 2015 from EUR3.6bn to approximately half - According to press, the
government proceeds to submit the final draft of the 2015 budget by Friday.
Assessment: n comments made by EU Commission spokeswoman Mina Andreeva, discussions on a follow-up program can begin ‘only once a
staff-level agreement for the completion of the review has been reached,’ while the troika will return to Athens to complete the review ‘as soon
as the conditions are there.’
The timing of troika’s return is up to Greek government’s determination to negotiate the key issues. Apart from this, according to Kathimerini
the strategy of the government has been modified insisting also to have a ‘clear view’ about the day after of the Greek program (including the
precautionary credit line and the role of the IMF in the new support framework) before any agreement with the troika is reached.
In this effort the government (according to Kathimerini) could try to approach the leader of the main opposition party, Alexis Tsipras (invite a
meeting of the party leaders of New Democracy, Pasok, and Syriza) to present to him a packaged solution that will also include Greece’s
commitment to specific reforms that could not be implemented during the current review (to be included as conditions to the precautionary
credit line).
To this end Evangelos Venizelos talking to reporters suggested that Syriza has to show more flexibility as he acknowledged that negotiations
have been hampered because Greece’s partners were skeptical of the political and social climate in the country, as the domestic situation, is
‘sterile and unproductive.’
In respect of the fiscal part of the negotiations, Evangelos Venizelos made it clear that there will be no new austerity measures and that the
government will not proceed to changes of the draft budget it has already presented. He went further suggesting that troika’s forecasts of the
budget performance have proven wrong over the past 3 years, while the actual results support the government’s estimates.
To this end, reports note that during a teleconference between troika and Greek government officials yesterday, troika officials accepted some
of the government’s positions reducing their estimated gap for the 2015 primary surplus target gap from EUR3.6bn to about half of this amount.
The negotiations are expected to continue but the Greek government will reportedly submit to the Parliament on Friday the final draft of the
2015 budget that foresees a primary surplus of 3% of the GDP (in line with the targets of the Greek program).
Finally, in respect of reforms, Kathimerini reports that in a meeting yesterday Samaras and Venizelos agreed that they will not negotiate at this
stage changes in the Social Security, in the VAT and in collective dismissals but other labor reforms as well as the new salary framework in the
Public administration will proceed. All of the above reforms are part of the 19 points that troika wants the Greek government to act upon in
order for the review to proceed.
Name: Constantinos Zouzoulas
Closing Price (EUR)
Market Cap (EUR m)
e-mail: constantinos.zouzoulas@axiavg.com
6.30
697.9
MOTOR OIL S.A.
Phone number: +30 210 7414460
Oil / Greece
Reuters / Bloomberg: MORr.AT / MOH GA
Fact: Motor Oil will announce 3Q:14 results today after the closing of the market. The company will host a
conference call tomorrow at 17:30 local time (15:30 UK time).
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Nov 13 Dec 13 Feb 14 Mar 14 May 14 Jun 14
Jul 14
Sep 14 Oct 14
MOTOR OIL (HELLAS) CORINTH REFINERIES S.A.
ATHEX Composite (Rebased)
Cons. Est.*
EV/EBITDA
P/E
P/B
EPS (EUR)
*FactSet
2013
2014f
2015f
9.4
6.8
9.9
1.23
0.64
5.1
6.7
1.09
0.94
1.16
-0.04
Assessment: The refiner is expected to post a satisfactory set of results given the industry environment during
the third quarter of the current fiscal period.
Refining division performance will be driven by the persisting recovery of cracking margins for Med refineries.
Significantly improved crude sourcing availability in Med region and lower prices should allow for lower
sourcing costs. At the same time demand is expected to remain solid for Med refineries, given the capacity
curtailments over the past periods.
Regarding the marketing division, fuel demand in Greece is starting to show early signs of recovery with
significant support coming from the tourism contribution.
We note that due to the strengthening of the USD we expect some FX losses and also some significant losses
from inventory revaluation given the prevailing oil prices.
All in all the market expects “clean” EBITDA of EUR116.8m, up by 42% y-o-y for 3Q:14 and “clean” net income
of EUR51.5m (+73% y-o-y)
EUR m
EBITDA
"clean" EBITDA
Net Income
"Clean" Net Income
9M:13
146.8
181.9
0.3
41.4
9M:14e
128.3
185.2
-2.1
40.5
y-o-y
-13%
2%
n.m.
-2%
3Q:13
85.4
82.4
32
29.8
3Q:14e
66.8
116.8
14.5
51.5
y-o-y
-22%
42%
-55%
73%
Source: Factset, Reuters, AVG Research
Name: Constantinos Zouzoulas
AVG Research
e-mail: constantinos.zouzoulas@axiavg.com
Phone number: +30 210 7414460
Page 2
Daily Note
Corporate and Macro Calendar
Company
Companies Earnings Announcements
Period
Date
Macros - November 2014
For the month of
Release date
Geniki Bank
Q3:14
19/11/2014
Turnover Index in Industry
Sep-14
19/11/2014
Motor Oil
Q3:14
19/11/2014
Commercial Transactions (prov data)
Sep-14
25/11/2014
Lamda Development
Q3:14
20/11/2014
Producer Price Index in Industry
Oct-14
28/11/2014
Jumbo
Q1:14
24/112014
OPAP
Q3:14
25/11/2014
Fourlis
Q3:14
25/11/2014
Aegean Airlines
Q3:14
25/11/2014
Rating Agency
Release date
Piraeus Bank
Q3:14
25/11/2014
FitchRatings
21/11/2014
Metka
Q3:14
26/11/2014
Moody's
28/11/2014
Mytilineos
Q3:14
26/11/2014
Folli Follie Group
Q3:14
27/11/2014
Company
Fact
Bank of Cyprus
Q3:14
27/11/2014
Hellenic Exchanges
AGM
19/11/2014
Athens Water
Q3:14
28/11/2014
Bank of Cyprus
AGM
20/11/2014
Thessaloniki Water
Q3:14
28/11/2014
Piraeus Port Authority
AGM
25/11/2014
AVG Research
Event
Credit rating review on Greece
Corporate
Date
Page 3
Daily Note
Disclosures
General information
This research report was prepared by Axia Ventures Group Limited, a company incorporated under the laws of Cyprus (but is
referred to herein, together with its subsidiary companies and affiliates, collectively, as “Axia”) and is authorised and regulated by
the Cyprus Securities and Exchange Commission (authorisation number 086/07). Axia is authorized to provide investment services in
the United Kingdom and in Greece pursuant to its permissions under the Markets in Financial Instruments Directive and may also
provide similar services in other countries, inside or outside of the European Union, subject to the applicable provisions. Axia is not a
registered broker-dealer in the United States (U.S.) and, therefore, is not subject to U.S. rules regarding the preparation of research
reports and the independence of research analysts. In the U.S., this research report is intended solely for persons who meet the
definition of “major U.S. institutional investors” in Rule 15a-6 under the U.S. Securities and Exchange Act, as amended, or persons
listed under Rule 15a-6(4)).
Content of the report
The persons in charge of the preparation of this daily report, the names of whom are disclosed below, certify that the views and
opinions expressed on the subject security, issuer, companies or businesses covered by this research report (each a “Subject
Company” and, collectively, the “Subject Companies”) are their personal opinions and that no part of their compensation was, is or
will be directly or indirectly related to the specific recommendations or views contained in this research report.
Whilst all substantial sources of information for the research are indicated in this report, including, without limitation, bases of
valuation applied to any security or derivative security, such information has not been disclosed to the Subject Companies for their
comments and no such information is hereby certified.
All information contained herein is subject to change at any time without notice. No member of Axia has an obligation to update,
modify or amend this research report or to otherwise notify a reader thereof in the event that any matter stated herein, or any
opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the Subject
Company is withdrawn. Further, past performance is not indicative of future results.
Persons responsible for this report: Constantinos Zouzoulas (analyst)
Key Definitions
AVG Research 12-month rating*
Buy
The stock to generate total return** of and above 10% within the next 12-months
The stock to generate total return* *between -10% and 10% within the next 12Neutral
months
Sell
The stock to generate total return* * of and below -10% within the next 12 months
Under Review
Stock’s target price or rating is subject to possible change
Applicable Laws / Regulation and AXIA Ventures Group Limited policies might
Restricted
restrict certain types of communication and investment recommendations
Not Rated
There is no rating for the company by AXIA Ventures Group Limited
* exceptions to the bands may be granted by the Investment Review Committee of Axia taking into account specific characteristics of
the Subject Company.
**total return: % price appreciation –percentage change in share price from current price to projected target price plus projected
dividend yield
AXIA Ventures Group Limited Rating Distribution as of today
Coverage Universe
Buy
Hold
Sell
Restricted
Not Rated
Under Review
Count
Percent
10
100%
Of which Investment
Banking Relationships
Count
Percent
5
50%
Daily Note
Independence and objectivity, conflicts of interest management
None of the analysts in charge of this report are involved in activities within Axia where such involvement is inconsistent with the
maintenance of that analyst’s independence or objectivity. None of them has received or purchased shares in any Subject Company
prior to any private or public offering of those shares. However, the analysts responsible for the preparation of this report may
interact with trading desks or sales personnel for the purpose of gathering and interpreting market information with regard to the
Subject Companies.
As an investment services provider engaging in a wide range of businesses, Axia is active in the field of activities which may include
the provision of services to issuers of securities, with respect to underwriting or placing of financial instruments or with respect to
advice on capital structure, industrial strategy and related matters (“investment banking services”). The nature of such activities, in
conjunction with the activity of production and issuance of research reports, may be considered as leading to situations of conflict of
interests when the research reports cover an issuer with whom Axia has an ongoing or has recently had a business relationship for
the provision of investment banking services.
Axia has all the necessary internal structures and arrangements in order to identify and avoid or, should avoidance be impossible, to
manage such situations in a manner consistent with the highest standards, in accordance with its internal conflicts of interest policy.
In compliance with such arrangements, analysts and other staff who are involved in the preparation and dissemination of research
(including, without limitation, this report) operate independently of management and the reporting line is separate from Axia’s
investment banking business. “Chinese Wall” procedures (procedures separating the availability of information of any Subject
Company) are in place between the investment banking and research businesses to ensure that any confidential and/or price
sensitive information is handled appropriately.
In all cases when, at the time of preparation or issuance of a report, an issuer covered by such report is in a business relationship
with AXIA for the provision of investment banking services, Axia includes a note in the report, drawing the attention of the recipients
to such fact. The same note is included when such business relationship has been terminated less than 12 months before the
issuance of the report. However, it cannot be fully precluded that issuers covered by a report may be in discussions with Axia’s
investment banking department for a potential future cooperation in investment banking matters, even though a business
relationship does not already exist. In such cases Axia may not be able to announce the fact of such discussions in the reports even if
such reports cover the specific issuer. Therefore, even if this research report does not mention any existing or recent business
relationship with an issuer whose securities are covered by the report, such issuer may be a potential future customer of Axia in the
field of investment banking services. It is noted that, even in such case, the persons in charge of this report do not participate in any
such discussion and their remuneration is not determined based on the proceeds of the department providing investment banking
services and that such situation is not reasonably expected to impair the independence or objectivity of Axia’s reports.
Investment decisions
Investors should make their own investment decisions using their own independent advisors as they believe necessary and based
upon their specific financial situations and investment objectives when investing. Investors should consult their independent
advisors if they have any doubts as to the applicability to their business or investment objectives of the information and the
strategies discussed herein. Investments involve risks and recipients should exercise prudence and their own independent judgment
in making their investment decisions. Therefore, this research report should not be regarded by recipients as a substitute for the
exercise of their own judgment. This research report has no regard to the specific investment objectives, financial situation or
particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a
complete statement or summary of any securities, markets, reports or developments referred to in this research report. It is
published solely for information purposes. This research report is being furnished to certain persons as permitted by applicable law,
and accordingly may not be reproduced or circulated to any other person without the prior written consent of a member of Axia.
This research report may not be relied upon by any retail customers or persons to whom this research report may not be provided by
law. It does not constitute a factual representation, a financial promotion or other advertisement, is not to be construed as a
solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction and may not be relied on in any
manner by any recipient. Unauthorized use or disclosure of this research report is strictly prohibited.
Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present
certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and
Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies
may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United
States.
No liability
Neither Axia nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy
or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any
losses or damages which may arise from the use of this research report. Axia does not represent or warrant that any investments
will increase in value or generate profits. Any responsibility or liability for any information contained herein is expressly disclaimed.
Any opinions or information contained herein is subject to change at any time without notice and may differ from other opinions
expressed professionally by persons within Axia. This material should not be construed as a solicitation or recommendation to use
Axia to effect transactions in any security mentioned herein or as an attempt to induce securities transactions by such recipients in
any manner whatsoever. Axia is not providing this research report pursuant to any express or implied understanding that the
recipients will direct commission income to Axia.
Daily Note
Recipients
In the countries of the European Union, this report is communicated by Axia to persons who are classified as eligible counterparties
or professional clients and is only available to such persons. In any other country outside the European Union, this report is
addressed exclusively to persons entitled to receive research reports from foreign Investment Firms according to the applicable legal
and regulatory provisions. The information contained in this research report is not addressed to and does not apply to any other
categories of investors than those specified above. Axia in relation to its research complies with the applicable requirements and
laws concerning disclosures and these are indicated on this legend or in the research report where applicable. By accepting this
research report, you agree to be bound by the foregoing limitations. This material is not intended for the use of private investors.
Axia Ventures Group
10 G. Kranidiotis,
4, Vas. Sofias Ave., 3rd Floor
645 Fifth Avenue, Suite 903
Berkeley Sq. House, Berkeley Sq.
1065 Nicosia, Cyprus
10674 Athens, Greece
New York, NY 10022
London, W1J 6BD
Tel: +357 22 742000
Fax: +357 22 742001
Tel: +30 210 7414400
Fax: +30 210 7414449
Tel: +1 212 7920255
Fax: +1 212 7920256
Tel: +44 20 78876080
Fax: +44 20 78876001
www.axiavg.com
Research
Constantinos Zouzoulas
constantinos.zouzoulas@axiavg.com
+30 210 7414460
Louis Nikolopoulos
Louis.nikolopoulos@axiavg.com
+30 210 7414463
Argyrios Gkonis
argyrios.gkonis@axiavg.com
+30 210 7414462
Vasilis Korakis
vasilis.korakis@axiavg.com
+30 210 7414461
Stavros Agrotis
stavros.agrotis@axiavg.com
+357(22) 742000
Constantinos Koufopoulos
constantinos.koufopoulos@axiavg.com
+30 210 7414422
Maria Mitsouli
maria.mitsouli@axiavg.com
+30 210 7414424
Elias Calfoglou
elias.calfoglou@axiavg.com
+30 210 7414429
Harry Smyrnopoulos
harry.smyrnopoulos@axiavg.con
+30 210 7414425
Athanasia Markidi
athanasia.markidi@axiavg.com
+30 210 7414428
Ioanna Georgiou
Ioanna.georgiou@axiavg.com
+30 210 7414427
George Baroumis
george.baroumis@axiavg.com
+30 210 7414426
Equity Sales / Trading