Utilities

Report by ResearchGreece

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.

Report by ResearchGreece

ResearchGreece’s base case scenario is materialising - Mitsotakis administration renewing its mandate and Greece avoiding a recession. With Greek equities +c.35% YTD they provide an update on the investment case for all the stocks under their coverage including:

Jumbo (BELA GA) - Working for the right reasons, namely valuation, balance sheet, management, business model, growth and dividends. The biggest risk: EU-China geopolitical issues affecting the firm's 70% merchandise sourcing.
Mytilineos (MYTIL GA) - Rating seems wrong, but concerns seem right, namely cash flow generation, corporate governance, energy crisis gains, cyclicality and low visibility. TP €17 (50% downside).
Bank of Cyprus (BOCH CY) - The best bank in Greece / Cyprus, worth >1.0x TBV based on RoTE >17% in 2023 (and >13% in 2025) and CoE of 12%. The first bank in the region to resume dividend payments (>8% next year). TP €5.7 (90% upside).