Greek Oil Refiners: need a little time to shake things up (HELLENiQ Energy downgraded to HOLD, Motor Oil Hellas stays BUY)

With benchmark refining margins falling to long-term average levels in September, we see little hope for a rebound in the short term. Oil prices are down, due to slowing demand growth, which flags further possible declines in margins. Energy costs remain significantly above pre-pandemic levels, putting European refiners at a disadvantage, while many of the usual crude oil supplies are not available, or are significantly more expensive. Both companies have made the most of recent windfalls, making significant inroads into their renewables strategies, although Motor Oil has higher capacity currently, but both should reach 1 GW by 2025E and 2 GW by 2030E. Although there is a gap between the falling refining EBITDA and its replacement by new businesses, we see Motor Oil as further ahead in this respect. Investors were not forgotten in the good times, sharing the proceeds, and we expect dividend yields to remain in a range of 6-8%, in the coming years, while both companies trade close to their average P/E and EV/EBITDAs, based on consensus expectations. We maintain our BUY on Motor Oil Hellas, with an updated 12M price target (PT) of EUR 25.8, offering 24.1% upside. We have downgraded HELLENiQ Energy to HOLD (from Buy), with an updated 12M PT of EUR 7.6, offering 8.3% upside.