Greek Equities: Adopting a more cautious stance
ResearchGreece revisits their stock picks and assesses the political outlook ahead of the next parliamentary elections. Macro conditions remain solid, with Q1 real GDP up 2.0% Y/Y, although inflation accelerated to 5.2% Y/Y in May (+0.0% M/M). With the Athens Index up +11% YTD, valuation multiples of non-banks in their universe have expanded to 13.2x P/E and 8.0x EV/EBITDA 2027, leaving more limited upside. Combined with polls pointing to a hung parliament, ResearchGreece is turning more cautious on Greek equities. Banks remain their preferred exposure (solid outlook - volume, rates, asset quality) as a leveraged Greek macro play. They prefer National Bank of Greece, Bank of Cyprus, Piraeus and Optima. Outside banks, they favour selective infrastructure, industrial and defensive names such as OTE, Titan, PPC and Piraeus Port over consumer stocks and cyclicals.
Utilities
My Big Fat Greek Deal - ResearchGreece downgrades their rating to DO NOT OWN IT (DOI) on the back of the €2bn/2GW solar agreement with Mytilineos. Why? Because the implied cost 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 they have seen; PPC does not need it and it does not maximise shareholder value. While ResearchGreece’s valuation yields a fair value >€15 per share (+40% upside), their conviction is lower than before the deal. Investors that do not mind uneconomic corporate decisions may find such an upside attractive.
Utilities
Announces the acquisition of Enel's assets in Romania for a total EV of €1.9bn - ResearchGreece likes the transaction because a) it was completed at a 50% discount to recent RES deals in Greece, namely Motor Oil’s €2.0m/MW or 12x EBITDA acquisition of Ellaktor wind assets; and b) it is evidence PPC is delivering on its business plan targets as laid out in 2021. ResearchGreece expects the same to follow with Greek RES targets (+5GW by 2026). TP €12.8 (60% upside).
