HELLENIC PETROLEUM | Earning its way out of rough waters
Over the course of the past 3 years the company has significantly realigned its balance sheet to a more “normal†working capital configuration, thanks to the streamlining of its operations and generation of over EUR 2bn in reported EBITDA. Given that refining margins remain at quite profitable levels and the group has increased its realization capacity to USD 10/bbl, we believe that the next task of reducing the group’s gearing is within reach, while maintaining capacity to also reward shareholders as the group’s cash conversion rate rumps up.We note that the introduction of the IMO 2020 rule may prove to be a source of upside risk on our 2020e given the group’s complexity. The cash injection from the agreed sale of DESFA is expected to jump start the deleveraging process from the c. EUR 2bn level. Additional operations, namely fuel marketing and petrochemicals also contribute considerably (c.25%) to the group’s overall EBITDA generation.
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.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
Research is the backbone of Eurobank Equities' platform, with a team of 4 professionals committed to generating actionable investment ideas by providing timely research products. We are committed to offering value-added services to clients by filtering market noise and providing insights on the multiple sectors that we cover. Our universe includes 26 - large, medium and small cap - companies whose market capitalization amounts to 80-85% of the total market capitalization of the Athens Stock Exchange. Our research team also maintains the capacity to generate ad-hoc research for micro-cap listed companies.
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