EUR 300.00 For Business Accounts Only

Athens Exchange | On a positive trajectory

Soft Q3 as trading activity remained limited – Athens Exchange reported a just marginally profitable quarter, with net income at € 0.3mn for Q3 2020 while recurring EBITDA came in at € 1.5mn vs € 2.3mn in Q3 2019. We remind that during Q3, the average daily trading activity in the cash market stood at € 42mn, lower by 36% q/q and by 39% y/y, as trading velocity plunged to 23% during the Jul-Sep period vs 38% on average in H1 2020.

… but 2020 ytd broadly in line with our base scenario – The Greek market’s ADV during 2020 has been through different phases, elevated in the first four months, subdued over the summer period followed by clear signs of pick-up since early November on the back of positive news related to C-19 vaccines’ development. Effectively, the ADV trend observed thus far is very close to our base scenario described in our previous report (All-weather, April 7 2020), i.e. at € 63mn ytd vs our € 65mn estimate.

Market likely to have passed the trough – Looking ahead we believe the market may have entered a positive cycle which could drive trading activity and prices sustainably higher over the years to come. The recent positive news on the vaccine front, the early innings of the Greek business cycle after a multi-year decline of the domestic economy and the extensive restructuring that has taken place all create a conducive backdrop for a strong economic recovery after the return to normalcy , further underpinned by the implementation of the EU recovery fund.

Minor changes in estimates – We make trivial changes to our estimates following on from the recent results. Our 2021 and 2022 are raised modestly, with revenue and EBITDA estimates higher by 2% and 3% respectively, mainly driven by slightly higher ADV assumptions (by 4% on average). We are now higher than consensus for both 2021 and 2022 (by c20% at EBITDA level), arguing that market estimates are too conservative, implying there is scope for positive surprise in the coming quarters.

Reiterate Buy, TP at EUR 5.00 – We raise our PT to € 5.00 from € 4.60, reflecting higher EBITDA and FCF estimates. AthEx trades at a 15% discount to peers (vs 10% LT avg) on estimates which remain conservative vs the mid-cycle earnings capacity of the business. In our view, the attractive valuation and the anticipated high dividend yield, coupled with the positive outlook ahead for trading activity and profitability warrant a constructive stance for AthEx; we thus reiterate the stock as one of our top picks.