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Edison Investment Research

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Equity Bottom-Up

HELLENiQ ENERGY Holdings S.A. / Equity Bottom-Up

Hellenic Petroleum reported Q222 adjusted EBITDA of €535m, almost seven times higher than a year earlier (€79m) and c 50% ahead of consensus (c €350m; six analysts). This was driven by a strong performance across all divisions. Refining saw record-high EBITDA with strong refining margins and export performance, due to market disruption and energy security concerns, following Russia’s invasion of Ukraine, along with strong demand from improved economic activity. This was despite a scheduled maintenance and higher energy costs. Marketing saw improved performance in most markets, with Greece’s exposure to tourism and GDP growth reflected in the results. RES (Renewable Energy Sources) delivered results of €6m due a full quarter performance from Kozani solar plant (204MW), which started up in April. Annualised run rate for RES is c €50m assisted by a 55MW wind farm acquired on 28 July 2022. Given the strong performance, our forecasts and valuation are under review.

Hellenic Petroleum reported Q222 adjusted EBITDA of €535m, almost seven times higher than a year earlier (€79m) and c 50% ahead of consensus (c €350m; six analysts). This was driven by a strong performance across all divisions. Refining saw record-high EBITDA with strong refining margins and export performance, due to market disruption and energy security concerns, following Russia’s invasion of Ukraine, along with strong demand from improved economic activity. This was despite a scheduled maintenance and higher energy costs. Marketing saw improved performance in most markets, with Greece’s exposure to tourism and GDP growth reflected in the results. RES (Renewable Energy Sources) delivered results of €6m due a full quarter performance from Kozani solar plant (204MW), which started up in April. Annualised run rate for RES is c €50m assisted by a 55MW wind farm acquired on 28 July 2022. Given the strong performance, our forecasts and valuation are under review.

Hellenic Petroleum reported Q1 adjusted EBITDA of €99m, a 54% increase year-on-year and c 20% ahead of consensus (€82m; based on four analysts). This was driven by strong benchmark refining margins and Greek market recovery (fuel demand was up 16% y-o-y). It was partially offset by higher energy and CO2 costs and an approximate two-month planned outage at the Elefsina refinery. As a result of the outage, net production was 2,798k metric tons (MT), down 16% y-o-y; however, this was partially offset by increased trading, with sales volumes down 3% at 3,292k MT. Reported EBITDA was €501m due to inventory gains of €267m and a temporary IFRS gain on increased CO2 prices, both of which should reverse in the coming quarters. Given the potentially large fluctuations in results quarter-on-quarter, we maintain our previous valuation of €7.48/share, which is derived from a blend of DCF, EV/EBITDA and P/E.

Hellenic Petroleum reported Q1 adjusted EBITDA of €99m, a 54% increase year-on-year and c 20% ahead of consensus (€82m; based on four analysts). This was driven by strong benchmark refining margins and Greek market recovery (fuel demand was up 16% y-o-y). It was partially offset by higher energy and CO2 costs and an approximate two-month planned outage at the Elefsina refinery. As a result of the outage, net production was 2,798k metric tons (MT), down 16% y-o-y; however, this was partially offset by increased trading, with sales volumes down 3% at 3,292k MT. Reported EBITDA was €501m due to inventory gains of €267m and a temporary IFRS gain on increased CO2 prices, both of which should reverse in the coming quarters. Given the potentially large fluctuations in results quarter-on-quarter, we maintain our previous valuation of €7.48/share, which is derived from a blend of DCF, EV/EBITDA and P/E.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.</li>
<li>Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.</li>
<li>Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.</li>
</ul>


Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.
Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.
Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.


Opportunities Within Energy and Materials

Hellenic Petroleum, a leading oil refiner in Greece, is making progress in its Vision 2025 strategy by building a 0.3GW renewable energy portfolio as of Q122. The company reported Q421 adjusted EBITDA of €138m, up 80% from Q420 (€77m), supported by a recovery in the refining sector. We expect Hellenic to continue to benefit from favourable refining margins and higher oil demand in Q122 and note that margins increased as an immediate reaction to Russia’s invasion of Ukraine. However, as natural gas and oil prices have surged, we expect a negative impact on cash flow due to increased working capital (estimated at a c €300m outflow). Due to the complexity of factors and the uncertain environment, we do not adjust our post-FY22 refining margin estimates at this stage. Hellenic could potentially provide a dividend yield of c 10% for FY22, including a special dividend once the sale of DEPA Infrastructure completes.

Hellenic Petroleum, a leading oil refiner in Greece, is making progress in its Vision 2025 strategy by building a 0.3GW renewable energy portfolio as of Q122. The company reported Q421 adjusted EBITDA of €138m, up 80% from Q420 (€77m), supported by a recovery in the refining sector. We expect Hellenic to continue to benefit from favourable refining margins and higher oil demand in Q122 and note that margins increased as an immediate reaction to Russia’s invasion of Ukraine. However, as natural gas and oil prices have surged, we expect a negative impact on cash flow due to increased working capital (estimated at a c €300m outflow). Due to the complexity of factors and the uncertain environment, we do not adjust our post-FY22 refining margin estimates at this stage. Hellenic could potentially provide a dividend yield of c 10% for FY22, including a special dividend once the sale of DEPA Infrastructure completes.

Hellenic Petroleum - Low dependency on Russian crude

<ul>
<li>We continue to see some encouraging signs that suggest that the lows may have been established for this correction.</li>
<li>We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows -- or even an undercut.</li>
<li>With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).</li>
</ul>


We continue to see some encouraging signs that suggest that the lows may have been established for this correction.
We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows -- or even an undercut.
With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).


Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

Greece

HELLENiQ ENERGY Holdings S.A. explores for, develops, produces, refines, and markets petroleum products.  The Company also produces petrochemicals and chemicals, and explores for and produces hydrocarbons.  It constructs and operates pipelines. The Company also offers engineering services.  HELLENiQ ENERGY Holdings S.A. operates refineries in Thessaloniki, the Athens metropolitan area, and Skopje.

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HELLENiQ ENERGY Holdings S.A. (ELPE GA)

Hellenic Petroleum - Record Q2 results

Hellenic Petroleum reported Q222 adjusted EBITDA of €535m, almost seven times higher than a year earlier (€79m) and c 50% ahead of consensus (c...

Edison Investment Research

Hellenic Petroleum - Strong Q1 results

Hellenic Petroleum reported Q1 adjusted EBITDA of €99m, a 54% increase year-on-year and c 20% ahead of consensus (€82m; based on four analysts)....

Edison Investment Research

Opportunities Within Energy and Materials

Global indexes remain below our key lines in the sand of $54 on $ACWX, $75.25 on $EFA, and the 200-day MA on $ACWI. As long as prices are below...

Vermilion Research

Hellenic Petroleum - Low dependency on Russian crude

Hellenic Petroleum, a leading oil refiner in Greece, is making progress in its Vision 2025 strategy by building a 0.3GW renewable energy portfolio...

Edison Investment Research

Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

We continue to see some encouraging signs that suggest that the lows may have been established for this correction. Still, cyclical value remains...

Vermilion Research

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