Usurpation of the throne and the code of honor

Written by the Apostle Menthos

Over the past decade, the explosive growth of the economic sizes of a particular group has created a strong possibility of accelerated inflation to the point that it is capable of placing it on the throne of the highest capitalization on the Greek Stock Exchange. A position that Coca Cola HBC has held for a long time with a market capitalization of €9.85 billion.

Indeed, when the astonishing trajectory of the fundamentals of the group in question does not even have the effects of a falling star or short-duration financial “fireworks,” but rather a gradual and very impressive upward trajectory over a number of years, the data speed will hardly be able to derail it from that target. .

This group has brought about such enormous changes in size that I do not remember there having been anything similar in the last thirty years. I am not referring to amounts amounting to tens of millions of euros, but rather to hundreds of millions of euros, which in recent years have become billions of euros.

Very symbolic of the long journey the group has taken over the years are the numbers that emerge from comparing the financial results of 2012 with the annual results of the ninth month of 2023.

Trading volume over this period has tripled, and from €1.453 billion in 2012, it has now reached €5.82 billion, and looks set to continue rising. Earnings before taxes, interest and amortization (EBITDA) increased five-fold, and from €170.1 million in 2012 it rose to an incredible figure of €1.013 billion.

As for net profitability, it has now gone to the stratosphere, confirming that “the sky is the limit” as it has increased twelvefold and from 51.55 million euros it has exceeded 650 million euros. At the same time, the group has also increased significantly. In the ninth month of 2012, the EBITDA margin reached 10.6%, while in the ninth month of 2023 it reached 17.69%, and the net profit margin increased from 3.41% now to 11.30%.

We are of course talking about one of the leading industrial and energy companies of our country with great global activity, the MYTILINEOS Group, which currently has a share price of 36.94 euros, the sixth largest capitalization on the stock exchange with a value of $5.278 billion. Behind the euro – for now and not in the future – are OPAP which has 5.406 billion euros, National with 5.643 billion euros, OTE with 5.626 billion euros, Eurobank with 5.994 billion euros and Coca Cola HBC with 9.846 billion euros. Therefore, based on our report on the Group’s strongest development path, the first chair’s target in the next four years, i.e. until the end of 2027, gives a target capitalization of around 10 billion euros, which corresponds to a price per share… 70 euros (!)

In the meantime, it is probably only a matter of time before it climbs to second place, as the €716m distance that separates it from Eurobank is quite achievable at the same time as it is very close to the top of the rankings in net profitability terms.

So, do not quickly and thoughtlessly judge MYTILINEOS’s goal of achieving a capitalization of EUR 10 billion as a difficult and unattainable goal. It would be a serious investment mistake. The deals concluded by the group now are large and at different levels than what we were accustomed to in the past. An example of this is the recent £1 billion contract awarded by MYTILINEOS Energy & Metals and GE Vernova’s Grid Solutions (GE) National Grid Electricity Transmission and SP Transmission, part of SP Energy Networks (SPEN), for the first power station High capacity marine connectivity on the east coast of the UK.

Meanwhile, the EU law on bio-raw materials, which aims to reduce the EU’s dependence on China for rare earths, which are essential for making products such as electric cars and wind turbines, is being portrayed as the MYTILINEOS group that benefits most, giving the green light. To flow history volume revenue group into a new huge market. Gallium, for example, is an important metal for the energy transition, the demand for which is steadily increasing and will explode in the coming years due to its applications in green energy, such as the production of electronic chips.

In the monthly chart analysis of the stock, last October’s candle almost bears witness to the continuation of the upward trend in the medium term. A looting of EUR 38.30 will give room for buyers to continue the move towards the initial target of EUR 45.50, but will open a long-term connection channel with EUR 50+.

We turn to ELINOIL (ELIN) where it was founded in 1954 and today is one of the most dynamic energy groups with a national network of 580 gas stations. Therefore, the financial results for the nine months of this year came once again to confirm on the one hand the very good path of the group and on the other hand the serious lag in the share price in relation to the dynamic steps it is making not only in sales of petroleum products, as it is one of the country’s largest exporters, but Also in developing sales in the electricity and natural gas market.

The group, with a board capital of €58 million, presented nine-month earnings before tax, interest and depreciation (EBITDA) of €22.59 million and earnings before interest and tax (EBIT) of €17.63 million. The group’s shares rose by 8.1 million euros from 70.23 million euros at the end of 2022 to 78.33 million euros on September 30, 2023. That is, a difference of approximately 20 million euros from the value it has on the stock exchange’s board of directors. Meanwhile, 15.32 million in cash is also available.

The decrease in financial costs was also significant to EUR 6.6 million compared to EUR 7.9 million in the corresponding period due to the significant decrease in net borrowing from EUR 115.82 million to EUR 44.68 million.

At the same time, ELINOIL reports that the second half of 2023 shows a significant increase in sales due to the very good trajectory of tourism, while it also expects the fourth quarter to perform very well due to the strengthening of the network with new gas stations in major urban centers. So it seems that 2023 will conclude with a very positive financial result for the group.

So, while the stock price should have been above €3, we see on the monthly price chart that it has reconfirmed the support area of ​​€2.10 and is gradually preparing to move towards the area of ​​the July highs between €2. 83 to 2.78 euros.

But this time a call to the €2.85-€3 resistance zone could prove fatal for sellers, as a violent bullish split is expected in the medium term with a move towards the €3.44 level. That is, the point at which the bottom of the four-year period from 2004 to 2007 was marked by a higher price of … 5.10 euros.

* Apostolos Manthos is responsible for technical analysis and investment strategy