January 19, 2015 GREEK EQUITIES DAILY Market Comment The market ended the week on a negative footing, posting 1.79% decline, limiting the week’s performance to a 1.41% gain. The banking sector was at the forefront of this evident weakness on Friday ending 4.63% lower. Trading activity was somewhat higher amounting to EUR99.8mn. Several names among large-caps came under pressure including OPAP (-8.02%), Fourlis (-5.07%)and Metka (-4.15%), while on the other hand OTE (+2.70%) was the main outperformer. Sentiment overall remains weak in the final run up to the elections, therefore we expect the market to remain jittery in the coming days. Athens General Index Politics // Syriza leading 3.1-5% according to latest polls The latest round of opinion polls published over the weekend suggest that Syriza retains a 3.1%-5% lead over New Democracy. Kapa Research shows Syriza leading by 3.1% compared with 2.6% last week (garnering 31.2% of votes). Metron Analysis suggests Syriza’s lead has widened to 4.6%, with the frontrunner still not being able to secure an absolute majority (147 seats). Another poll conducted by Public Issue suggests Syriza is leading with a 5% margin (35.5% vs. 30.5%) securing 144 seats. The previous poll conducted by the same company was suggesting Syriza was leading by 8% and might secure a thin majority (151 seats). Market Statistics Economy // Press reports on EU openness to possible further program extension, while Greek FinMin warns of complacency According to press over the weekend, it seems that EU officials have been discussing the prospects of extending Greece’s program by up to 6-months in an effort to give a newly formed Greek government the time to engage in deliberations with the troika. We note that such an extension would have to be requested by the Greek side as soon as a new government is in place. The French FinMin offered additional leeway as he reportedly stated that he’d be open to negotiations with a new Greek government on matters relating to the program and national debt. The Greek Finmin highlighted during an interview on Sunday, that he fears that involved parties on the Greek side exhibit an unjustified complacency, which is backed by the fact that funding has remained for the most part uninterrupted over the last year, nevertheless deadlines remain tight thus non allowing for the exhibited complacency. Economy // Press reports on potential new levies included in Syriza’s agenda According to the local paper Eleftheros Typos, Syriza’s program related to social security provides for the introduction of a series of taxes including taxation on all financial transactions and special duties on gaming. The article refers to a series of documents marked as Syriza’s proposals under public consultation, which, indeed, make generic reference to the imposition of several “social levies” for the benefit of the social security system. With regard to gaming in particular, measures under consideration seem to be levies on player’s bets as well as a gaming duty burdening the operators (e.g. OPAP, casinos, Hellenic Lotteries etc.). From the language used in the document it is not clear whether this refers to the increase of the gaming duty already in place or whether it simply does not take into account its existence since 2013. 1 16/01/15 16/11/14 16/09/14 16/07/14 16/05/14 16/03/14 16/01/14 1400 1300 1200 1100 1000 900 800 700 Close 1D % YTD % ASE General Index 790.6 -1.8 -4.3 FTSE ASE Large Cap 252.6 -2.2 -4.6 FTSE ASE Mid Cap 754.1 -1.9 -2.5 Turnover EUR mn 99.8 Avg Turnover (3mo) EUR mn 101.9 Market cap EUR bn 52.2 Valuation* 2014e 2015e 2016e P/E 47.8 22.4 15.6 EV/EBITDA 8.1 5.4 4.7 P/BV 1.0 1.0 0.9 Yield 2.8% 3.6% 4.9% *Focuslist valuation data: Our Focuslist consists of 29 stocks accounting for ca 85% of total ATHEX Mcap Daily Best - Worst Performers * Sidenor 2.7% Intracom -8.0% OTE 2.6% OPAP -7.2% Autohellas 2.0% Alpha Bank -6.4% *FTSE Large Cap & FTSE Mid Cap Greek Sovereign Yields GGB Feb'23 GGB Feb'28 GGB Feb'33 GGB Feb'37 GGB Feb'38 GGB Feb'42 9.73% 9.37% 8.60% 8.26% 8.23% 7.89% See Appendix for Analysts Certification and important Disclosures GREEK EQUITIES DAILY January 19, 2015 Banks // Eurosystem funding up by EUR 21bn during the last few weeks, ECB approves EUR 40bn credit line through ELA (press) According to press reports (kathimerini), Greek banks’ reliance on the Eurosystem has increased by EUR 21bn during the last few weeks, totaling more than EUR 65bn, in their effort to weather tightening liquidity conditions domestically. Greek banks’ liquidity positions have deteriorated lately mainly as a result of: i) deposit outflows (ca EUR 3.0bn during December, continuing during January), ii) higher needs for tbill auctions by ca EUR 9.0bn, given that foreign investors do not rollover their holdings, iii) reduced access to interbank markets which has cost about EUR 9.0bn lately and iv) lower value of collaterals posted to ECB. At the same time, the ECB appears to have approved a EUR 40bn credit line for Greek banks through ELA as two of the four systemic banks have already submitted requests to Bank of Greece in order to draw ca EUR 5.0bn in a proactive move to secure comfortable liquidity ahead of possible further tightening of liquidity conditions. Finally, according to German press reports (Der Spiegel) Greek banks may not be able to take advantage of the ECB’s QE program that is expected to be launched soon given the latest political developments. Events Calendar Results Announcements AGMs / EGMs Ex – Div Economy // Fitch rating downgrades Greece outlook to “negative” on the back of political uncertainty, maintains rating at “B” The rating agency announced that it was reducing its outlook on the country’s rating to “negative” from “stable” on the back of the political uncertainty given the January 25th snap elections and the low visibility of future policy making. The agency believes that the new government and the troika are likely to come to an agreement as they both have strong incentives to do so. The next review is set for May 15th, while the downside risks to the rating involve a prolonged political deadlock and both macro and fiscal slippage. On the contrary, the formation of a stable government and a timely agreement with creditors as well an acceleration in economic activity would have a positive effect on the agency’s view on the country’s credit profile. Equity Research [email protected] Nikos Koskoletos, CFA +30 2103720257 [email protected] Stamatios Draziotis, CFA +30 2103720259 [email protected] Helen Herra +30 2103720118 [email protected] Panagiotis Kladis, CFA +30 2103720267 [email protected] Katerina Zaharopoulou +30 2103720252 [email protected] George Andrinopoulos +30 2103720251 [email protected] Christina Kouklaki +30 2103720254 2 [email protected] GREEK EQUITIES DAILY January 19, 2015 Eurobank Equities Investment Firm S.A. Member of Athens Exchange, Cyprus Stock Exchange and Eurobank Group. 10 Filellinon Street 105 57 Athens, Greece Telephone: +30 210-3720 000 Facsimile: +30 210-3720 001 Website: www.eurobankequities.gr E-mail: [email protected] Regulated by the Hellenic Capital Markets Commission Authorisation No: 6/149/12.1.1999 VAT No: 094543092, General Commercial Reg. 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