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Athens Exchange | It’s getting better

2021 appears promising despite the recent slowdown in trading activity – The average daily trading activity in the cash market year-to-date stands at ca €80mn, i.e. significantly higher than the figures seen between 2016 and 2020 (avg at € 62mn) and closer to 2015 levels (€85mn). We see the recent slowdown in trading activity as temporary, owing to the recent wave of equity and debt issues that absorbed market liquidity, as well as renewed concerns about the pandemic. We expect trading activity to pick up again after September as the market gradually focuses on the prospects for a (hopefully) better 2022. That said we expect AthEx 2021 profitability to shape at much better levels than in the recent past (net profit at € 7.5mn, >2x last 5yr avg).

Big picture supportive – During the previous decade Greece implemented an extensive reform program, it has a stable government with a reformist agenda, while it is poised to be a key beneficiary of the European Union Recovery & Resiliency Facility (GDP to receive a ca 7% boost by 2026 according to BoG). We believe that the domestic economic recovery should lead to increased trading activity as some of the existing companies will grow bigger, while a potential new wave of listings may increase the market’s attractiveness. We thus reiterate our view that the Greek equity market has entered a positive cycle in terms of trading activity.

Minor changes to estimates – We proceed with fairly limited adjustments to our estimates given that the market trends so far are broadly in line with our base scenario. We have increased our revenue estimates for 2021-2023 by 2% on average reflecting a slightly higher ADV assumption (3% higher than before). We have also lifted our 2021e EBITDA by 5% but have lowered slightly 2022-23e assuming somewhat higher operating expenses. Finally, we have raised our net profit estimates by ca 10% on average for the next 3 years, reflecting among others a lower effective tax rate.

Reiterate Buy, TP at €5.10 – Following on from the aforementioned recalibrations, we have edged up our 12-month PT on ATHEX to €5.10 from €5.00 previously, also reflecting a higher net cash position for ATHEX due to our higher 2021 FCF projection. The stock currently trades at a c30% EV/EBITDA discount vs international peers, compared with a long-term avg discount of 11%. It also stands at c20% discount to its own 5yr average. In our view, following the last months’ sluggish performance, the valuation remains quite attractive especially in view of the positive outlook for trading activity and profitability. We thus reiterate the stock as one of our top picks.