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Greek Refineries (HelleniQ Energy – Motor Oil) | Margins stronger for longer; RES angle remains mispriced

Robust H1 builds promise for the rest of the year – Following a muted – in terms of share performance – 2024, held back by sector-wide headwinds (retreating refining margins) and company-specific challenges (fire incident and MSCI exclusion in MOH’s case), Greek refineries have rebounded ytd (Total return: MOH +23%, ELPE +14%), supported by recovering margins and strong operational resilience, with prospects also looking promising for H2’25 given easy comps. Meanwhile, both companies have built meaningful exposure to RES in recent years, with EBITDA contribution set to reach 7% for HelleniQ and 12% for MOH in FY’25e. Yet, this shift appears underappreciated by the market, with both names still trading at their LTA 1yr fwd EV/EBITDA (MOH at 4.7x, ELPE at 5.7x), offering room for re-rating as RES platforms scale and visibility improves. Given the current valuation, we see a better risk-reward skew for MOH.

Resilient refining margins defy bearish estimates once again… – Refining margins have shown impressive resilience YTD, with benchmark indices rebounding to $7–9/bbl from mid-single digits in H2’24, pointing to solid demand/supply dynamics ahead of the seasonally strong summer period. Despite macro and geopolitical turbulence complicating the outlook, consumption remains firm (especially in Greece) while expectations for refining capacity growth have turned more cautious vs last year. Against this backdrop, we expect both refineries to return to peak utilization in 2026e (MOH’s impaired CDU set to resume by end-Q3 and ELPE’s Elefsina turnaround completed in Q2), and we forecast double-digit refining margins to support €0.5–0.6bn in annual refining EBITDA per company.

…with expansion in RES remaining a strategic priority – Both refineries remain committed to expanding their RES footprint, with MOH targeting 1.6GW by 2027e (from 839MW currently) and HelleniQ aiming for 1GW by 2026e (from 494MW), with both guiding for 2.0GW by 2030. These targets are supported by sizeable development pipelines (2.7GW for MOH, 5.2GW for HelleniQ), though our estimates remain more conservative (1.51GW for MOH, 1.05GW for HelleniQ by 2027e), reflecting typical implementation delays. Our forecasts translate to run-rate RES EBITDA contributions of >€170mn and c€100mn, respectively. Both companies also seem to be increasingly focused on enhancing vertical integration across their electricity portfolios, evidenced by ELPE’s full acquisition of Elpedison and MOH’s internal restructuring routing Komotini CCGT output directly to NRG, ahead of the unit’s upcoming commercial launch.

c9% uplift to our 2026e EBITDA – Incorporating higher refining margins through the mid-term, the lift of the margin cap in fuels marketing, and improved operational efficiencies across the board, we raise our 2025/26e EBITDA for HelleniQ Energy by 5/9%, respectively, now estimating EBITDA at the low end of the company’s €0.8–1bn guidance range across both years and the medium term. Similarly, we raise our 2025/26e EBITDA estimates for Motor Oil by 1/9%, respectively, forecasting €932mn in 2025e and between €850–900mn from 2026e onwards..

Valuation; MOH top pick, ELPE to Hold – We have recalibrated our valuation for both companies, making modest upward adjustments to our PTs, albeit less than the near-term earnings upgrades would imply, as we factor in higher capex assumptions. We thus raise our PT for HelleniQ to €9.1 (from €8.8), but downgrade our recommendation to HOLD on valuation grounds. For Motor Oil, we increase our PT to €29.9 (from €28.1), reiterating the stock as one of our top picks in Greece, arguing that the investment case is quite derisked given the current price, with the stock at c17% discount vs ELPE and at small discount vs mid-cycle levels. Our PTs imply a 2026e EV/EBITDA multiple of c5.6-6.1x for MOH and ELPE respectively.