Athens Stock Exchange – The ultimate “turnaround story”

With gains of 823% from the low at the beginning of May 2019 (1.3 euros), the share of PPC (+ 7% now on the ATHEX) emerges as one of the most interesting “turnaround stories” in the Greek market. Axia Ventures Group, which had recommended the PPC share with a target price of 7.3 euros since November 2019, restated the “purchase” recommendation for the title in January this year, raising the target price to 15.10 euros. while today after the strong offer of Spear WTE Investments Sarl, member of Macquarie Infrastructure and Real Assets Group (MIRA) for 49% of the value of HEDNO at 2.116 billion. Enterprise Value (EV) including (pro-rata) net debt of 804 million euros, has put the stock under consideration for any new valuation.

According to Axia Ventures, the total value (EV) of HEDNO was estimated at 4.3 billion EUR (EV), when the capitalization of PPC today on the stock market is 2.3 billion. euro. The transaction for 49% of the PPC subsidiary implies 9.8 times the EV / EBITDA index (Business value for profit before interest taxes and depreciation and is 30% higher than the average market estimate, thus crystallizing significant value for the valuation PPC’s Enterprise Value) currently stands at approximately 5.4 billion euros (net debt 3.2 billion euros and capitalization on Friday 2.2 billion euros), at a time when the valuation (EV) of HEDNO at 4.3 billion euros, indicates that the value of PPC for the other sectors of PPC activity is only 1.1 billion euros. Macquarie’s offer also suggests that there is value in Greek assets especially if they do not carry dead weights

It should be noted that PPC, which remains one of the most “political cards”, historically traded at a “discount” on the Athens Stock Exchange, as investors incorporated in its price the risk of trade union and political interventions, as the so-called stakeholders (important shareholders) remained on the sidelines, while taxpayers always “intervened” in difficult times to balance the balance sheet of the otherwise listed company. At the beginning of May 2019, however, the political regressions of the then government, the negative results and the report of the chartered accountant for the 2018 balance sheet shook the market, considering that if immediate measures were not taken, they would lead to a collapse in 12-18 months.

The new management, which undertook to restore the production of cash flows in the company, started a big plan of transformation of the company, while since then the market expected as a positive catalyst for the sale the sale of 49% of the distribution sector (HEDNO) of the company.