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Athens Exchange | Ride on Volatility

Progress in 2021; strong start to 2022 – The Greek market showcased some progress during 2021 which proved to be the best year since 2015 from a transaction value perspective. In fact, 2021 ADV came in 16% higher than the average over 2016-20, with ATHEX managing to generate revenues 23% higher than the average over the same period. The domestic market’s trading activity ytd has been quite promising, with ADV standing at ca € 83mn, i.e. 16% higher than last year’s ADV and ca 35% than the same period last year.

Short to medium term prospects favorable in our view - We remain constructive about the prospects of the Greek equity market thanks to a number of factors which we detail in this report, namely: i) positive macroeconomic backdrop and potential for rating upgrades, ii) Greek banks’ better shape, also reflected in higher market values, iii) the market’s lag on several metrics which suggest significant room for improvement, and, iv) volatility in global equity markets which may lead to higher trading velocity.

Global markets volatility likely to underpin velocity – As far as the latter point is concerned, with global equity markets trading not far from multi-year highs and investors being quite nervous about the upcoming shift in monetary policy, volatility has been on the rise lately and, in our view, this is likely to remain the case for the coming quarters. We expect the elevated volatility in global markets to increase trading velocity in the domestic market too, boding well for ATHEX’s revenues.

Limited changes to estimates – We have increased our revenue estimates for 2022-2023 by ca 2% on average despite the fact that our previous estimates already incorporated a mid-teen average growth rate. We have lifted our 2022-23e EBITDA accordingly by ca 1% on average, with incremental revenue being slightly diluted by our assumption for slightly higher operating expenses. Our estimates stand c6-7% above consensus on revenues and c7-10% on EBITDA for 2022-23.

Reiterate Buy, TP at €5.20 – We have raised our 12-month target price on ATHEX to €5.20 from €5.10 previously, filtering through the slightly higher earnings estimates. AthEx currently trades at a >30% discount vs its international peers in EV/EBITDA terms, compared with a long-term avg discount of 11%, and ca 25% discount to its own 5yr avg. In our view, following the last months’ sluggish performance, the risk-reward asymmetry is very positive in view of the positive outlook for trading activity and profitability. We thus reiterate our ‘Buy’ recommendation and add Athens Exchange in our top picks list.