Market Monitor – Market Comment – In the Spotlight [Manos Chatzidakis]

09.01.2015 09:33

Market Comment

Greek stocks remained under heavy pressure for the third successive session on Thursday. General Index fell 2.06 pct to end at 761.66 points, after rising as much as 1.96 pct early in the session. The index has lost 8.92 pct in the last three sessions for a decline of 7.81 pct so far this year. Turnover shrank to 76.23 million euros, down from Wednesday’s 121.6 million.

Despite short term technical oversold across big caps the absence of solid bid may retain market weakness as domestic political events drive investor’s psychology.

In the Spotlight

 

Greece/Banking Sector:

Greek bank access to European Central Bank funding assumes a successful completion of a bailout program review and a subsequent deal on a follow-up program with EU/IMF lenders, the ECB said on Thursday. The ECB makes exceptions on the collateral it accepts from Greek banks, allowing them continued access to central bank funding despite the country’s low sovereign credit rating.

“The continuation of the waiver is based on the technical extension of the European Financial Stability Facility program until the end of February 2015 and the existence of an International Monetary Fund program,” an ECB spokesperson said in a statement. “It is also based on the assumption of a successful conclusion of the current review and an agreement on a follow-up arrangement between the Greek authorities and the European Commission, in liaison with the ECB, and the IMF.

 

Greece/Debt: Greece’s central govt debt increased to €321.9b at end-Nov. from €321.2b a month earlier; Government arrears stood at €4.54b at end-Nov. vs €5.04b in Oct. ; Arrears figure incl. outstanding tax rebates of €731m vs €718m in Oct.

 

Greece/Retail sales: According to the head of the National Confederation of Entrepreneurship and Commerce (ESEE), Vassilis Korkidis, Christmas turnover dropped by 8 to 10 percent from a year earlier, which translates into a loss of half a billion euros. December sales slumped to 6.3 billion euros in total, from 6.8 billion in December 2013. Private consumption per capita shrank by an estimated 20 percent this Christmas, to 325 euros from 406 euros in 2013.

 

Greece/Primary Budget Surplus: Greek January-November 2014 primary budget surplus rose at EUR3.7bn (2% of GDP) vs EUR1.5bn primary surplus (0.8% of GDP) in the corresponding period in 2013. This despite a reduction in Greek state’s overdue debt to the private sector to EUR3.8bn in November from EUR4.3bn in October 2014 (down 55% since December 2012).

 

Greece/Unemployment: The slight but steady decline in the unemployment rate continued in October 2014, when it dropped to 25.8 percent from 26 percent in the previous month and from 27.8 percent a year earlier, the Hellenic Statistical Authority (ELSTAT) announced on Thursday. Figures showed that the number of jobless numbered 1,245,340 in October, recording an annual decline of 104,263 people or 7.7 percent, and a drop of 13,491 people and 1.1 percent from September 2014.

The number of employed people reached 3,585,234, posting a rise of 72,379 (or 2.1 percent) from October 2013 and an increase of 6,853 (or 0.2 percent) from last September. The financially inactive population numbered 3,288,819, down 8,384 from a year earlier, representing a reduction of 0.3 percent. Unemployment among women remained higher than that among men, but dropped from 31.9 percent in October 2013 to 29.2 percent this year. Among men the rate fell to 23.1 percent from 24.6 percent.

Those aged 15 to 24 are still the group with the highest jobless rate, at 50.6 percent, but this was significantly lower than the 57.4 percent posted in October 2013. The 25-34 age group had a 34.5 percent rate, while the 45-54 bracket was on 20.8 percent and those aged between 55 and 64 had a one-in-six (16.5 percent) rate.

In contrast, seasonally adjusted data released by the Manpower Organization (OAED) concerning November 2014 recorded a significant monthly increase in the number of unemployed, by 43,980 people, climbing to 1,060,067. This constitutes a 4.3 percent rise from October 2014 and is mostly attributed to the end of the tourism season.

 

ASE/December Stats: Foreign investors slightly reduced their exposure in the Athens Stock Exchange in December, with their participation falling to 61.5 pct from 62.1 pct a month earlier. However, if the participation of Hellenic Financial Stability Fund were to be included, then foreign investors’ participation in the Greek market rose 1.3 pct to 45.9 pct in December, while Greek investors held 27.3 pct of the market’s capitalisation.

Foreign investors were net buyers for the 26th successive month in December, with capital inflows totalling 219.11 million euros, while Greeks were net sellers, with capital outflows totalling 207.64 million euros. Foreigners accounted for 66.2 pct of market transactions, while average daily turnover was 102.68 million euros, up from November (82.43 million) but down from 113.79 million euros in December 2013.

The number of active investors codes rose significantly to 25,827 in December, from 19,228 in November, but down from 39,268 in December 2013. The market’s capitalisation totalled 53.85 billion euros at the end of December, down 15.1 pct from November, and down 23.9 pct from December 2013.

 

Jumbo/H1 Results: Jumbo H1 2015 (01/07/14-31/12/14) group sales advanced 7.7% y-o-y to EUR341m, coming in 1.3% lower vs our call of EUR345.7m. In Q2 terms, Jumbo group sales grew by 5.4% y-o-y to EUR195.6m, 2.3% below BETAe of EUR200.2m. In specifics:

¡  Amid tough market environment, Jumbo reported a strong H1/Q2 top-line performance driven by market share gains in Greece (resilient business model through this crisis) and double-digit growth rates in Cyprus and Bulgaria.

¡  The small top-line miss mirrors a sales slowdown in December which is attributed to a) sharp consumer sentiment deterioration linked to Greece’s elevated political risk (presidential/snap general elections) and b) to a lesser extent to bad weather conditions during the crucial Christmas period (accounts for 28% of annual sales). As such, fiscal Q2 2015 L-F-L same stores sales dropped 2.6% y-o-y in Greece against a c3.5% y-o-y growth in fiscal 1Q15 (flattish in fiscal 1H15).

¡  In fiscal 2015e (to June 30) we see group sales, EBITDA and net profit at EUR592.5m, EUR160.3m and EUR113m, rising 9%, 9% and 12% y-o-y, respectively, thanks to organic growth, resilient gross margins and operating efficiency gains.

¡  Jumbo runs a total of 70 stores in 4 countries, 53 out of which in Greece, 5 in Cyprus, 8 in Bulgaria and 4 in Romania, as well as the on line store e-Jumbo.

¡  Jumbo currently trades 8.5x its 2015e EPS, 5.1x EV/EBITDA, while offering 15% ROE, 5.4% dividend yield and EUR142m net cash position (15% of mkt cap) at end-fiscal 2015e, on our estimates.

 

OPAP: EU General Court in Luxembourg ruled that the exclusive right to run lotteries and games of chance “does not constitute state aid”; Casino operators had challenged Greek measures that granted Opap an exclusive license until 2022 to operate 35,000 video lottery terminals and a 10-year extension until 2030 of the exclusive right to run 13 games of chance. The EU court backed the European Commission’s decision that the measures didn’t give Opap an advantage

 

Hellenic Exchanges: Helex will announce its 4Q/12M 2014 results on March 16.

 

Chipita: Food group Chipita is relocating back to Greece from Cyprus, bucking the recent trend of major enterprises leaving this country. The move is based on the improvement in Chipita’s net position and on the decision to relist the company on the Greek bourse, according to the company’s CEO Spyros Theodoropoulos. Chipita’s return to the local stock market may take place within 2015, but any decision to that end will also depend on local political and economic developments.

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