Piraeus Port Authority: Casting anchor (downgraded to HOLD)
Following the 42.6% rally since March, and as the approval for the additional investments is still pending, we have decided that it is time to take a breather and downgrade Piraeus Port Authority to HOLD (from Buy). 14 months after our initiation on the company, the stock has appreciated by 39.2%, leaving no room for upside in our current price target (PT) of EUR 23.0/share, which we keep unchanged vs. our March 2019 update. We believe that our PT accurately reflects the port’s current situation, as management still faces challenges in receiving approval for the additional investments (logistics centre, shopping mall, ship repair zone). Moreover, as we are officially entering the elections month, with the opposition in the lead, we understand that the next few months could be a transitional phase in Greek politics, affecting the timeline of any final decision on the company’s masterplan. However, we are confident that, if the additional investments are approved, we could see further upside from a potential new revenue stream for the port; for now, we have decided to adopt a “wait and see†stance, as the story lacks short-term catalysts, in our view.Piraeus Port Authority SA is a Greece-based company engaged in the management and operation of Piraeus port. The main activities of Piraeus Port Authority SA are ships' anchoring services, handling cargo, loading and unloading services as well as goods storage and car transportation. The Company is also responsible for the maintenance of port facilities, the supply of port services (water, electric current and telephone connection, among others), for services provided to travelers and for renting space to third parties. Piraeus Port Authority SA has two wholly owned subsidiaries, Nafsolp SA and Logistics OLP SA. Nafsolp SA is mainly engaged in ship repairing services and Logistics OLP SA is mainly engaged in the development of combined transportations as well as port facilities and services.
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