(non-)public offering and extraordinary profits

Written by Demosthenes Triga

OPAP’s key financial numbers for the first half of 2023 were generally in line with market estimates with a positive surprise well above market estimates without dividends for FY2023. In particular, ex-dividend is €1 per share with the current ex-dividend yield of more than 6.2%! The question is whether the total will exceed market estimates of €1.50-1.55 per share (9.5% dividend yield) or has the company simply deferred the dividend?

OPAP’s average dividend yield over the past 20 years is close to 9% without a single year in which it did not pay out at least 3% (2013). Last year’s dividend yield exceeds 9% (end-of-year share price), while pre-dividend market estimates were slightly higher than last year. From Thursday 2 November 2023, OPAP shares will be traded on the AA Exchange without the right to receive an interim dividend (€1) for the year 2023 with payment commencing on 9 November 2023.

At the same time, the company announced a share buyback program for a maximum of 5% of the company’s shares (i.e. up to 18,167,092 shares), during the period from 09/05/2023 to 12/31/2024, with a price range of EUR 0.30-20 per share. The maximum amount expected to be allocated for the purchase of private equity is approximately 150 million euros. The final amount and number of treasury shares to be acquired depends on market conditions, the price of the company’s shares and their marketability.

On the occasion of announcing the financial results for the first half of 2023, the company clarified that it will not continue the profit reinvestment program, which has resonated with the investment public, especially with long-term investors. The column’s estimate is that the company’s announced stock buyback program will partially replace a portion of the potential additional earnings. That is, the full year’s distributions may exceed last year’s distributions, but not as much as the increase we saw in the pre-distribution distributions (an increase of 233%). A prerequisite for the above estimate is that part of the €150 million allocated for 2023 will be used to purchase private equity.

The purchase of private equity is an indirect reward for shareholders in the medium term, since through the purchase and subsequent cancellation of private equity, earnings per share increase. If stock buybacks are not used, the dividend yield could improve further than estimates and total dividends could increase significantly.

It is reported that the company owns 1,829,624 private shares (0.54% of the total) at an average acquisition price of €7.92 per share according to the accounting data dated June 30, 2023. Following the recent transfers within the company, the major shareholder became VALEA Corporation through Allwyn Greece and Cyprus Holdings 2 Ltd. (AGCH2) owns 50.18% according to official AA figures

It is worth noting that the percentage of the main shareholder exceeding 50% is not considered a reason for a mandatory public offering, as this was achieved through the exercise of the reinvestment program (dividends), which is a form of capital increase. capital. Thus, the way the critical ratio of 50% has been reached, it is exempted from the mandatory public offer obligation! The major shareholder has the right to make a voluntary public offer at any time.

In conclusion, at the valuation level, OPAP constitutes an EV/EBITDA ratio of 7.9 times estimated 2023 operating earnings, 18% below the 10-year average, while its estimated 2023 EBITDA multiple is only 12 times. Finally, when calculated according to the Rule of 72 (72/9=8) over 8 years, an investor who would reinvest OPAP dividends (average dividend yield of 9%) would have doubled his capital, without taking into account the change in stock price.

For the fifth month in a row, foreign investors are attracted to AHE

The participation of foreign investors in the total market capitalization of the Greek market in August decreased to 62.8% compared to 63.20% on July 31, 2023, recording a decrease of 40 basis points. In a continuous segment of foreign investors. Without counting the participation of the HFSF (3.9 billion euros or 4.9%) in the total value of the Greek market, the participation of foreign investors amounted to 66.03%. Writing in capital letters AA and on 08/31/2023 it was estimated at 80.08 billion euros, compared to 81.25 billion euros in the previous month, i.e. a contraction of 1.43%.

Regarding capital flows, foreign investors continued to sell for the fifth month in a row, with net outflows over the past five months averaging €112 million. In particular, net outflows to foreign investors in August amounted to €80 million with the total balance for 2023 reaching €283 million. The three largest net inflows by foreign investors for August came from Ireland at €33 million, Luxembourg at €2.6 million, and the Cayman Islands at €2.5 million. Meanwhile, the three largest outflows came from France with €32.9 million, the USA with €31.5 million, and the United Kingdom with €16.6 million.

Foreign unitholders achieved 62.3% of total transactions (purchase and sale) in August 2023 (compared to 51.9% in the previous month). The countries with the highest portfolio value for August remain the USA with a total portfolio value of €9.9 billion, Cyprus with a portfolio value of €8.6 billion, and Luxembourg with a total portfolio value of €5.1 billion.

The word “recession” is a thing of the past for S&P 500 companies

Of the 500 companies that make up the S&P 500, 62 mentioned the term “recession” during their second-quarter 2023 earnings conference call, marking the fourth straight quarter of decline since the peak in the second quarter of 2022. Number of companies in the index S&P 500 That Mentioned Recession The word “recession” on its Q2 2023 earnings conference call was 45% lower than the Q1 2023 number, 58% lower than the Q4 2022 number, and 74% lower than Its peak is in the second quarter of 2022.

It is worth noting that 62 is lower than the five-year average (82) and slightly higher than the ten-year average (60).

At the industry level, the financial sector, as expected, has the highest number (22) and corresponding percentage (32%) of S&P 500 companies reporting the word “recession” in the second quarter of 2023.

If we take into account recent history, we will see that after the peak of the first quarter of 2020 (Covid-19), the decrease in the number of times the word “recession” was mentioned gave higher values ​​for the S&P 500 index. In fact, the lowest level of the current movement of the S&P 500 index was reached in The third quarter of 2022 is right behind the second quarter (Q2 2022) with the highest number of times the word “recession” is heard.

Finally, it is clearly not an indicator to go ahead with buying and selling, but it is an indicator that the “truth” is usually built into the prices and most of the time the “unknown” for investors is what determines the next direction of the price. Markets. As it stands, the market seems to have become complacent about a potential recession in the US, and we are holding on to that for now!

Agenda (09/19/23 – 09/24/23)

The announcement of the financial results for the first semester has been completed

Today, Tuesday, Alpha Astika Akinita and Premia Properties are expected to announce the financial results for the first semester. COSTAMARE PARTICIPATIONS has held a regular meeting of the GS and will publish the financial results for the first half of 2023. Synergy Bank is expected to announce the financial results for the first half on Wednesday, while The Bank of Greece is expected to announce its balance of payments for July. On Thursday, TERNA Energy (after stock market close), Biohalco, Lavipharm and Evrofarma announce their financial results for the first half of the year, and the Bank of Greece is expected to announce developments in the travel balance of payments for July. On Friday, Tzirakian held a regular meeting of the GS

All eyes are on the Fed on Wednesday

Abroad, today, Tuesday, the inflation rate in the euro zone for the month of August will be announced, while in the afternoon, building permits for the same month will be published in the United States of America. On Wednesday, it is Great Britain’s turn to announce inflation for August and the German producer price index for the same month. However, the news of the day and week is the Fed’s decision on dollar interest rates, which will be announced at 21:00, and market estimates are unchanged at 5.5%! On Thursday, it was the Swiss Central Bank’s turn to announce interest rates on the Swiss franc, which reached 1.75%. In the afternoon in the US, the Philadelphia Fed Manufacturing Index for September and Used Home Sales for August will be announced. On Friday, the week concludes with the announcement of the S&P PMI Services Index based on September data.

* Demosthenes Tringas is a certified stock and market analyst at Beta Exchange – [email protected]

** Copied from Kivalio newspaper