GREECE | EQUITY RESEARCH

September 03, 2013

STRATEGY UPDATE

Greek Equity Strategy Update

ASE General Index Price

1200
1100
1000

Featuring

900
800
700

EXECUTIVE SUMMARY | Rolling a hard six?

NON-FINANCIALS | Fairly valued

BANKS | Pending loose ends

600
Aug-12 Nov-12 Jan-13 Mar-13 Jun-13 Aug-13

Index Data
Reuters RIC
Bloomberg Code

.ATG
ASE Index

Closing Price (29/08)

52 Week High
52 Week Low

MACRO | Restoring sustainability

893.77
1,159.97
642.22

Performance (1m)
Performance (YTD)

+3.1%
-1.6%

Research Team
COMPANY SECTION

John Kalantzis, Head of Research

+ 30 210 3720118

jkalantzis@eurobankequities.gr

Stamatios Draziotis, CFA

+ 30 210 3720259

sdraziotis@eurobankequities.gr

Nikos Koskoletos, CFA

+ 30 210 3720257

nkoskoletos@eurobankequities.gr

Katerina Zaharopoulou
+ 30 210 3720252

kzaharopoulou@eurobankequities.gr

Christina Kouklaki
+ 30 210 3720254

ckouklaki@eurobankequities.gr

Sales
+30 2103720119
Trading
+30 2103720168 / 110

See Appendix for Analyst Certification and important

disclosures

GREEK EQUITY STRATEGY

September 03, 2013

Summary of recommendations and price targets

Eurobank Equities Non-financials coverage
Mcap
(EURmn)

Current
Price (EUR)

Recommendation

Target Price (EUR)

Upside /
Downside (%)

Page #

3,353

6.84

Buy

8.30

21%

43

Metka

526

10.13

Buy

13.40

32%

49

EYDAP

628

5.90

Buy

7.60

26%

48

Alpha Bank

5,472

0.50

Hold

0.514

3%

40

Piraeus Bank

5,326

1.05

Hold

1.13

8%

41

Coca-Cola HBC

7,550

20.60

Sell

17.70

-14%

42

OPAP

2,329

7.30

Buy

8.30

14%

44

Titan Cement

1,137

14.75

Sell

12.40

-16%

45

Folli- Follie Group

9312

17.18

Hold

14.50

-16%

46

Jumbo

1,043

8.02

Hold

8.00

0%

47

Mytilineos Holdings

475

4.06

Buy

6.10

50%

50

Hellenic Stock Exchanges

369

5.65

Sell

4.90

-13%

51

Ellaktor

358

2.02

Buy

3.40

68%

52

Terna Energy

306

2.80

Buy

3.45

23%

53

Corinth Pipeworks

247

1.99

Hold

2.10

6%

54

Frigoglass

233

4.60

Hold

5.60

22%

56

Intralot

242

1.52

Buy

2.20

45%

55

EYATH

209

5.76

Hold

5.50

-4%

57

GEK TERNA

179

2.08

Hold

2.50

20%

58

Sidenor

149

1.55

Sell

1.20

-23%

59

Fourlis

120

2.36

Hold

2.70

14%

60

Stock

Top picks
OTE

Banks

Non-Financials

th

Source: Eurobank Equities Research. Prices as of August 29 , 2013.

th

Prices at the close of August 29 , 2013 used throughout this report

GREEK EQUITY STRATEGY

September 03, 2013

EXECUTIVE SUMMARY

GREEK EQUITY STRATEGY

September 03, 2013

EXECUTIVE SUMMARY | ROLLING A HARD SIX?

Strong djvu feeling

Market opportunism on the

rise

but valuation looks full

and the 800-pound gorilla

roars

Odds improving

Top picks: OTE, Metka and

EYDAP (new)

Eight months have passed since we released our last strategy piece and we feel that nothing
has really changed from a market perspective. We more or less stand at the same market
levels (-8%) vs. last January, when we argued the (2012 H2) rally was finally exhausted. Our
crystal ball showed back then that our base case scenario is that the market will go
nowhere in the next 6 months, albeit may exhibit large swings in the meantime, something
we vividly experienced. The Cypriot crisis in March (-15%), the surprisingly painless troika
review in May (+40%), the bank recap (-16%), the political crisis due to the national
broadcaster shutdown (-18%) and finally the salvation from escaping early national
elections (+13%), were the subsequent events that graphically looked like a rollercoaster.
The market has been quiet lately but another short relief rally could be staged again as
conditions look prime. The upcoming troika review will most likely approve the next Greek
loan disbursement, given that conditionalities for certain milestones/prior actions will be
met as additional progress has been made lately on both fiscal and structural fronts.
Besides, we have argued several times that all that matters is the political will to execute
the adjustment program, and, as long as there is no material noncompliance with the
EU/IMF, financial aid will be on the table to cover any funding gap in the future despite
rolling market pressure ahead of each quarterly review. Furthermore, the upcoming Greek
market reclassification from MSCI in Nov to Emerging market status could reignite investors
interest in Greece. Besides, now that several neighboring emerging market countries face
political or social turmoil, investors may seek safety elsewhere and Greece ironically
could seem like a safe haven attracting significant inflows for a number of stocks.
Greek stocks remain at par with other European periphery markets (c7x 2013 EV/EBITDA),
despite the rolling earnings and cash flow downgrades every single quarter; a valuation level
that does not leave much room for further upside. Although we do recognize a possible
opportunistic market reaction from these levels, we really struggle to justify any
fundamental reason why Greek stocks deserve a premium. Valuing 2015 or even further out
profits at such high multiples or arguing over a quick return to cross cycle earnings defies
our logic. Our bottom up methodology shows a potential return of just 6%, very low to meet
a typical required return threshold, especially given the risks attached to Greek assets. After
all, with high quality (for Greek standards) corporate senior unsecured debt and GGBs
yielding 8-10% respectively, we wonder if it is worth climbing down the seniority ladder.
Now that the massive bank recap is finally over and the four systemic banks statically report
sufficient capital metrics, we think it is time the matter of asset quality be addressed. One
should not ignore that the recapitalization was enough to cover the bond losses mostly from
the PSI, while loan losses from the 22 consecutive recessionary quarters are still at large, on
balance sheet and waiting to be repaired eventually. No matter how this plays out for
banks, which in any case are already half-covered excluding collaterals, Greek companies
will have to endure the pressure. Obviously the burden first lies with the equity holder
one way or another to the benefit of the debt holder; however the level of dilution,
subordination, deleverage and/or cash flow downgrade clearly varies significantly.
Although a full-fledged recovery is not yet in sight, it is true that several economic indicators
have been improving or looking less harsh. Most importantly however, any debt relief that
may come from the official sector in 2014 after Greece meets the condition of primary
surplus may significantly improve the odds, providing a stronger platform for growth and
employment in the long term, a necessity to sustain political and social cohesion.
Nevertheless, at these valuation levels and without yet knowing how domestic authorities
will play the NPLs wildcard, we prefer to stay vigilant and opportunistic.
We retain our preference for names with robust and sustainable cash flow generation, solid
balance sheets, exposure to infrastructure/privatizations and a combination of attractive
valuation and/or growth. We reiterate OTE and Metka as preferred picks, while we add
EYDAP in our portfolio.

GREEK EQUITY STRATEGY

September 03, 2013

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: research@eurobankequities.gr

Regulated by the Hellenic Capital Markets Commission

Authorisation No: 6/149/12.1.1999
VAT No: 094543092, Reg. No. 003214701000

IMPORTANT DISCLOSURES
This report has been issued by Eurobank Equities Investment Firm S.A., a member of the Athens Exchange, a member of the Cyprus Stock Exchange and a member of
Eurobank Ergasias S.A. Eurobank Equities Investment Firm S.A., is regulated by the Hellenic Capital Markets Commission (HCMC) with authorization number
6/149/12.1.1999. This report may not be reproduced in any manner or provided to any other persons. Each person that receives a copy by acceptance thereof represents
and agrees that it will not distribute or provide it to any other person. This report is not an offer to buy or sell or a solicitation of an offer to buy or sell securities mentioned
herein. The investments discussed in this report may be unsuitable for investors, depending on their specific investment objectives and financial position. The investments
discussed in this report are subject to risks and in respect of some investments there is risk for multiplied losses to be caused in respect to the capital invested.
The information contained herein has been obtained from sources believed to be reliable but it has not been verified by Eurobank Equities Investment Firm S.A. The opinions
expressed herein may not necessarily coincide with those of any member of the Eurobank Group. No representation or warranty (express or implied) is made as to the
accuracy, completeness, correctness, timeliness of fairness of the information or opinions herein, all of which are subject to change without notice. No responsibility of
liability whatsoever or howsoever arising is accepted in relation to the contents hereof by Eurobank Equities Investment Firm S.A. or any of its directors, officers or
employees.
Eurobank Equities Investment Firm S.A. follows procedures under Eurobank Group policies that set up Chinese Walls, restricting communication between Research and other
departments inside the Company or the Group so that Eurobank Equities Investment Firm S.A. complies with regulations on confidential information and market abuse.
Eurobank Equities Investment Firm S.A. or any of its related legal persons, does not hold shareholdings exceeding 5% of the total issued share capital in any of the subject
companies mentioned in this report, with the exception of Hellenic Post Bank, Eurobank Properties, Lamda Development, Altec, Nikas, Quality & Reliability, Alpha Trust
Andromeda, Kardasilaris and to the Cyprus Stock Exchange listed Cyprus Airways Public Ltd.
None of the subject companies mentioned in this report holds shareholdings exceeding 5% of the total issued share capital of Eurobank Equities Investment Firm S.A., or any
of its related legal persons, with the exception of Eurobank Ergasias S.A. and National Bank.
Eurobank Equities Investment Firm S.A., or any of its related legal persons, is not a market maker (of stocks or of derivative contracts on stocks) to any of the subject
companies mentioned in this report with the exception of National Bank, MIG, Alpha Bank, OTE, Marfin Popular Bank, Viohalco, Piraeus Bank, Titan, Motor Oil, Ellaktor,
Mytilineos, PPC, Bank of Cyprus, Hellenic Post Bank, Intralot, Coca Cola Hellenic, OPAP, Hellenic Petroleum, Gek Terna, Hellenic Exchanges, Sidenor, Frigoglass.
Eurobank Equities Investment Firm S.A., or any of its related investment banking services legal persons, is not a party to any other agreement relating to the provision of
investment banking services, which a) has been in effect over the previous twelve months or b) has given rise during the same period to the payment of a compensation or
to the promise to get a compensation paid, with any of the subject companies mentioned in this report with the exception of the following: Athens International Airport,
Depa, DOL, Electroniki Athinon, Eurobank, Hellas On Line, Hellenic Petroleum, Hellenic Post Bank, Hygeia, Maillis, Mytilineos, OPAP, Regency Entertainment, Teletipos,
Vivartia, EYDAP, Thessaloniki Water & Sewage, Haitoglou Bros, Attica Bank, Selonda Aquaculture, Greek Yellow Pages, Digimed Communications Ltd., Geniki Bank, BlueFin
Tuna, S&B.
Eurobank Equities Investment Firm S.A., or any of its related legal persons, is not a party to an agreement relating to the production of this report with the subject companies
mentioned in this report.
Analyst Certification:
This report has been written by John Kalantzis, Stamatios Draziotis (CFA), Nikos Koskoletos (CFA), Katerina Zaharopoulou, Christina Kouklaki.
Analyst Compensation:
The remuneration of John Kalantzis, Stamatios Draziotis (CFA), Nikos Koskoletos (CFA), Katerina Zaharopoulou, Christina Kouklaki is not tied to the investment banking
services performed by Eurobank Equities Investment Firm S.A. or any of its related legal persons. John Kalantzis, Stamatios Draziotis (CFA), Nikos Koskoletos (CFA), Katerina
Zaharopoulou, Christina Kouklaki did not receive or purchase the shares of the subject companies mentioned in this report prior to a public offering of such shares.
Planned Frequency of Updates:
Eurobank Equities Investment Firm S.A. provides daily and monthly updates as well as updates on companies based on company-specific developments or quarterly financial
results announcements or any other publicly available information.
Eurobank Equities Investment Firm S.A. Rating System:
Stock Ratings
Coverage Universe
Count
Total
Buy
8
30%
Hold
9
33%
Sell
4
15%
Restricted
3
11%
Under Review
3
11%
Total
27
100%

Investment Banking Clients

Count
Total
3
38%
1
11%
0
0%
1
33%
0
0%

Analyst Stock Ratings:

Hold:
Sell:

Based on a current 12-month view of total shareholder return (percentage change in share price to projected target price plus projected
dividend yield), we recommend that investors buy the stock.
We adopt a neutral view on the stock 12-months out and, on this time horizon, do not recommend either Buy or Sell.
Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock.

Restricted:
Under Review:

Under Eurobank Group policy and / or regulations which do not allow ratings
Our estimates, target price and recommendation are currently under review.

Buy: