Hellenic Petroleum - A flexible refiner in a turbulent time
Hellenic Petroleum (ELPE) saw a weaker than anticipated Q419 due to the lowest system benchmark margins since Q313. In addition, the Elefsina scheduled turnaround resulted in lower utilisation and sales, although the refinery registered a strong performance post start-up in the same quarter. While Hellenic’s refinery system is well-placed to benefit from IMO 2020, Q120 has been marked by external factors that are affecting global oil supply and demand and disrupting the markets. In this note we update our estimates and valuation to reflect the FY19 results and provisionally, the impact of coronavirus. Hellenic’s high complexity index and high storage capacity allow for flexibility in times of uncertainty. Our updated valuation is down 21% to €7.33/share.Hellenic Petroleum operates in the energy sector predominantly in Greece and the Balkans. Co.'s main activities include: refining and marketing of oil products ("R&M"); exploration, development and production, of hydrocarbons ("E&P"); manufacturing and marketing of petrochemical products; and power generation and trading. Refining, supply and trading are Co.'s core business and its main source of income and profit. Retail trading activities are split into domestic, comprising Co.'s Greek subsidiaries EKO and Hellenic Fuels, and International through local in-market retail subsidiary companies. Hydrocarbon exploration and production (E&P) Co. activities relate to Greece and abroad.
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