Greek Refiners: elevated margins, extended run (HELLENiQ Energy (HOLD) and Motor Oil Hellas (BUY) - transfer of coverage)

Following a change in analyst responsibilities, we transfer coverage, and update our forecasts and outlook, of the Greek refiners, to reflect the recent upturn in the refining backdrop. We rate Motor Oil Hellas (MOH) a BUY, with an updated price target (PT) of EUR 31.5 (from EUR 25.8), and keep HELLENiQ Energy (ELPE) a HOLD, with an updated PT of EUR 8.8 (from EUR 7.6). The two Greek refiners offer a broadly similar compelling investment case and remain attractively valued on absolute terms, in our view. What is more, both companies are well-placed to capture the relatively favourable industry backdrop, going forward. MOH, however, clearly leads the pecking order, in our view. As a single refinery, with a far leaner cost structure and higher complexity, MOH has repeatedly proven its mettle to deliver far greater returns; while, thanks to its low gearing, it can afford to accelerate its energy transition push, into both renewables and waste treatment projects. Even at our PT, the stock would trade at a significant discount vs. its European peers. With our estimates some 17% higher than the consensus expectations, we expect the share price performance to match the recently evident structural upcycle in the global refining industry soon.