The cold day and the low tones of M.M, the wait for movement from “Rafina”, the bad sign for the banks, the shipowners & the Aegean Baltic Bank

Greetings, the day after a significant political event, such as the expulsion of a prominent political figure from their party, is always “a cold day” for everyone who thinks a little more than just about…social media. After all, Mitsotakis himself has always been a moderate politician who thinks quite thoroughly and methodically about his moves and decisions. Therefore, anyone who knows him understands that Samaras didn’t leave him much room to delay this or avoid it entirely, something which I’m sure he would have preferred, if, of course, such a political option had existed. Now, current reports say that Samaras has been in America since yesterday on a planned trip, while his friends both inside and outside the Parliamentary Group were probably taken by surprise by this development and likely weren’t informed about what the former Prime Minister himself would say at a time when there were some small points of contact between the two sides.

M.M.

At the Maximos Mansion, there is not a single person is in a celebratory atmosphere at this time, a source tells me, because Mitsotakis himself doesn’t feel that way and, of course, doesn’t transmit it. After all, internal problems and family feuds are, as we said yesterday, the worst. I hear that there are efforts being made to strengthen internal cohesion within the New Democracy party, but on the other hand, my most reliable source told me yesterday: “You know, all these things that fill columns and headlines, one moment it’s what Samaras says, the next what will happen with Karamanlis, then how the media moguls and oligarchs are treating us, but… don’t you think that at some point we should let Mitsotakis govern? Because then you write – rightfully so – that there are thousands of issues and problems, and we’re doing nothing.” And to be honest, that’s true, but I’ve never seen a second term where this didn’t happen. That is, internal strife, complaining, and misery along with backstabbing overshadowing the real issues affecting citizens’ everyday lives. And it requires caution.

Karamanlis

Since I mentioned Karamanlis earlier, let me tell you that there is a sense in the report that on Friday, at the presentation of Charvalias’ book, Karamanlis will attend and comment negatively on Samaras’ expulsion. Now, I don’t know the tone, whether it will be sharp or not, but of course, it will be interesting to see “where he takes it” just a few days after the event, especially considering that Samaras gave him some support for the presidential role. Here, I must share my opinion that Samaras’ case is different from Karamanlis’ mainly for the centrist audience of New Democracy, but also for the people who traditionally vote for the party but don’t belong to the “popular Right”. Karamanlis (from Rafina) is burdened by two terms that even reasonable right-wingers admit were among the worst of the post-junta era. He inflated the debt and the deficit, leading the country into memoranda, because as much as we might agree that Papandreou didn’t manage the impending crisis of the country’s bankruptcy well, he didn’t create it in six months. In October 2009, PASOK came in, and the following Spring, we entered the memorandums; the poor guy couldn’t have done anything, even if he wanted to. However, Karamanlis is also burdened with betraying his party, and not only that, with the full support he gave to SYRIZA. Who can forget what happened from 2015 to 2019? Therefore, it’s certain that if Karamanlis starts doing the same as Samaras, yes, it will create a new problem that will add to the current one, but there will also be many people who will curse them together, because let’s not forget that Mitsotakis has only been re-elected for a second term for just 1.5 years.

A Good News

In relation to the high-level event organized by Bloomberg for the Greek banking sector yesterday, it is worth noting that the event was not sponsored by the Government or the banks. It was held at Bloomberg’s initiative, which covered all the expenses of the organization, because the executives of the news agency have noticed that there is increased interest among its subscribers about the Greek economy and businesses. And clearly, this is truly good news.

What the Bankers are Planning

At Bloomberg’s event, a lot of interesting things were said by both the Prime Minister and the Governor of the Bank of Greece. The CEO of Piraeus Bank, Christos Megalou, announced interesting and innovative initiatives that the bank will undertake in the coming period to boost demand in mortgages. On his part, the CEO of Alpha Bank, Vassilis Psaltis, impressed with the numbers he mentioned, when he said that from 2019 until today, the bank’s corporate portfolio has increased by 67%, and explained that this means a net credit expansion of 9 billion euros. The CEO of Eurobank, Fokion Karavias, spoke about the sector’s capital surplus and Eurobank’s strategy to channel the funds into credit expansion, higher dividends, and M&A in asset management, banking, and insurance. The head of National Bank, Panagiotis Mylonas, revealed that NBG is exploring opportunities outside the Greek market, with the first target being the Middle East.

Shareholder Reshuffling at Aegean Baltic Bank

They are trying to build something big at the small Aegean Baltic Bank (ABB), and that’s why everyone is taking their shareholder positions now. The founder and CEO of ABB, Theodoros Afthonidis, will use the money he receives from selling shares and rights to Teli Mystakidis to buy shares from minor shareholders in ABB so that – in the end – his stake will increase to 28%. He will thus become the second-largest shareholder after Teli Mystakidis, who will officially control 48% of the share capital but will have bought voting rights from Afthonidis through a private agreement, meaning he will eventually control 68%. Shipping magnate Nikos Tsakos will maintain his 24% stake in ABB. Therefore, Afthonidis will receive dividends for his 28%, but his voting rights will be limited to 6% to 7% based on the private agreement with Mystakidis. The next moves involve a capital increase and listing on the stock exchange, but these are plans for next year, depending on market conditions at the time.

ELLAKTOR and the R.E.D.S. Deal

R.E.D.S. from the ELLAKTOR group is looking for new revenue streams until the new projects at Alimos Marina, Kamba, and Gournes in Crete move faster. The company, which sold Trade Estates S.A., the Smart Park commercial park in Spata, to the group’s subsidiary Fourlis last year, is preparing to buy “ATHENS PROPERTY BV,” which is connected to the Dutch shareholders of the group. The price for the acquisition will be 80 million euros, and R.E.D.S. will proceed with issuing a secured bond loan of 65 million euros from the parent company ELLAKTOR. Last week, ELLAKTOR’s board approved the signing of a contract for a “common secured bond loan agreement with R.E.D.S. S.A., without conversion rights into shares, for a 7-year term, and with full coverage of the total loan amount.” As for “ATHENS PROPERTY BV,” it owns 10 properties, independent buildings, located in prime positions in central Athens, and “the described transaction serves the corporate interest and the company’s strategy both in the short and long term,” as noted in the related recommendation by the board of the former listed company. To secure the parent company “ELLAKTOR S.A.” as the bondholder for any claims arising from the bond loan, R.E.D.S. will provide collateral (pledge – assignment) over the total amount it receives from selling its property in Bucharest, Romania. Additionally, “ELLAKTOR S.A.” will register a mortgage on the new properties that R.E.D.S. will acquire. R.E.D.S. has called an extraordinary general meeting on December 5 to obtain approvals for both the purchase of Athens Property BV and the issuance of the secured bond loan up to 65 million euros.

The new “vehicle” of Velanis

The new investment vehicle of Kostas Velanis is called “Urban Utopia Estates,” which began its journey in the market yesterday. The company focuses on real estate, including the buying and selling of properties, land, hotels, etc., and the initial share capital is 3.5 million euros, divided into 3,500,000 corporate share units of capital contributions, each with a nominal value of 1 euro. The capital was provided by Velanis’ main investment arm, Vel Investment Fund AIFLNP VCIC Limited, based in Nicosia. Kostas Velanis, from the family that brought the famous Singer sewing machines to Greece, has been involved in investments for many years through various corporate structures. A clear indication of his strong capital base is the fact that the Vel Investment Fund bid for the Tethys project, a loan package with a nominal value of 254 million euros, which was secured by real estate guarantees in 72 hotels, offering more than 4,000 rooms in popular tourist destinations (Aegean, Ionian, Crete, Macedonia, Thrace, Central Greece, and the Peloponnese). Velanis’ fund managed to make it to the shortlist, but ultimately, in September 2022, the preferred investor was the consortium of SMERemediumCap-Latonia Enterprises Company Limited-Athanasios Laskaridis family office-WHG Europe Limited-Brown Hotels. He is a special kind of entrepreneur, characterized by simplicity in his behavior and an unconventional style. At 75 years old today, he typically does not abandon his jeans and sneakers, even for official events. He also claims to live abroad, choosing the renowned neighborhood of Paradiso in Lugano, Switzerland, for his residence. A lover and connoisseur of classical music, according to those who know him, he is a frequent attendee of performances at the National Opera House, the Megaron Concert Hall, and important musical events at the Herod Atticus Theater. Additionally, he loves fine cuisine, which is why he prefers some of Athens’ most distinguished restaurants for his business meetings. The management of the new company has been entrusted to Ioannis Tsikrikonis.

The OPAP counterattack

Analysts predict that the third quarter of the year will be particularly strong for OPAP. The Organization will announce its financial results for the period tomorrow, and in its preview, AXIA Research emphasizes that it expects a strong set of results for OPAP due to the substantial increase in GGR, among other reasons, such as the normalization of payouts, higher betting activity (supported by Euro 2024) compared to last year’s third quarter, and ongoing demand for online casino games. As for the lottery activity, the catalyst will be the Joker, which recorded the second-largest jackpot in the history of the game, while the increase in the cost per column for the game also supports this. Therefore, combined with the stabilization of operating costs, analysts expect OPAP to show a significant improvement in profit margins. Based on the performance to be announced, analysts believe OPAP will meet the management’s guidance for EBITDA of 750-770 million euros in 2024. Axia has maintained its “buy” recommendation for OPAP’s stock and raised its target price to 16.40 euros, which, based on yesterday’s drop in the stock below 15 euros, offers an upside potential of about 10%.

The Delisting of MLS and the “Tsaka Strategy”

Four years and a few months after the decision to suspend its stock due to serious accounting irregularities, the Athens Stock Exchange Committee for Listings and Market Operations decided to delist MLS. Shareholders are officially mourning their money, and only a few bondholders are left hoping for compensation. Hope dies last, but what can they expect when the main shareholder and management, following the “Tsaka strategy,” promise investors restructuring plans but never deliver them? In the MLS case, no one has been punished, except for the auditor of PKF who audited the controversial 2019 financial statements.

The Sudden Change in Morgan Stanley’s Stance on Greek Banks

This sudden shift in Morgan Stanley’s position from “overweight” to “equalweight” on Greek Banks… carried a distinctly “political” message. When it reduces the target price for Piraeus to 4.96 euros (from 5.39 euros) while the stock is trading at 3.6 euros on the market, and when for National Bank the target drops to 9.05 euros (from 10.25 euros yesterday), on the day when its stock is trading at 6.8 euros, it is clear that this is not a downgrade of forecasts or estimates but a “warning” with the backdrop of broader political and geopolitical developments. Morgan Stanley acknowledges the upward potential of the banking sector in Greece, but at the same time, it warns that without political stability and sound public financial management, these goals are highly volatile. It is no coincidence that, while speaking to Bloomberg yesterday, the Prime Minister highlighted political stability, prudent fiscal management, and early debt repayment as the government’s priorities for the next two and a half years.

Electricity Prices

Yesterday, the wholesale price of electricity averaged 183€/MWh, while at one point it reached 733€/MWh. However, the most striking aspect was the very low participation of hydroelectric plants in the energy mix, which stood at 1.38% yesterday, whereas usually water contributes more than 5% to 7%. Natural gas contributed 53%, while electricity imports from abroad were extremely low, accounting for less than 5% (previously above 10%). The conclusion is that there is electricity sufficiency in Greece, even without rain and snow, which usually feed the hydroelectric plants. For this reason, the Prime Minister stated yesterday that “we are pioneers in energy transition, but we have not yet seen the corresponding benefits.” All this comes ahead of Friday’s crucial meeting with the special team from Brussels, which is coming to Athens to give the “green light” to the measures the government plans to take so that the crazy increases in wholesale prices do not impact consumer electricity bills, both for small and large consumers.

The Market’s Deaf Ear to Good News, Listening Only to Catastrophic Scenarios

The threats of a third world war and a new energy crisis, along with exaggerated scenarios of political destabilization, overshadowed all the good news in fiscal and corporate matters. From the beginning of the session, sellers emerged, setting the tone for the entire market. The General Index struggled to hold on to its technical support level of 1,400 points, with relative success. It dropped to 1,381.7 points (-1.58%), fought, and rose to 1,392.44 points (-0.81%). Trading value amounted to 121 million euros, with minimal packages valued at 4 million euros. Eurobank fought its battle of dignity, at one point losing -2.28% to 1.925 euros but managed to close above 2 euros, at 2.006 euros (+1.83%). However, it was alone, as National Bank fell below the psychological level of 7 with a large drop of -3%, and Piraeus dropped to 3.59 euros (-2.36%). DEI fought its own battle, initially down -2.74% to 11.72 euros, but eventually closed above 12 euros (+0.17%). On the other hand, EYDAP stood out early with an optimistic start that was maintained throughout the session, closing at 5.78 euros (+1.4%). Jumbo, with an increase of +1.49% to 24.6 euros, provided some support to the index, but had no help from the heavier stocks (OTE, 3E, etc.).

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