Last close As at 05/08/2026
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Research: Energy & Resources
Hellenic Petroleum, a leading oil refiner in Greece, reported Q221 EBITDA of €79m This is a 26% increase on Q220 (€63m) and was driven by a strong performance in its petrochemicals and retail marketing activities, offset partially by a weak performance in its refining business. We expect rising demand for transport fuels and higher benchmark refining margins to drive a recovery in refining earnings in H2. Hellenic is also moving toward its Vision 2025 strategy, with the ongoing spin-off of its refining and petrochemical activities and recent corporate governance changes. For now, our valuation is based on the current shape of the company, pending more information on its energy transition strategy.
Written by
Hellenic Petroleum |
Expect refining earnings turnaround in H2 |
Results |
Oil & gas |
6 September 2021 |
Share price performance
Business description
Next events
Analysts
Hellenic Petroleum is a research client of Edison Investment Research Limited |
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Hellenic Petroleum, a leading oil refiner in Greece, reported Q221 EBITDA of €79m This is a 26% increase on Q220 (€63m) and was driven by a strong performance in its petrochemicals and retail marketing activities, offset partially by a weak performance in its refining business. We expect rising demand for transport fuels and higher benchmark refining margins to drive a recovery in refining earnings in H2. Hellenic is also moving toward its Vision 2025 strategy, with the ongoing spin-off of its refining and petrochemical activities and recent corporate governance changes. For now, our valuation is based on the current shape of the company, pending more information on its energy transition strategy.
Year-end |
Revenue |
Adjusted EBITDA* (€m) |
Net debt** |
P/E |
Dividend yield |
12/19 |
8,857 |
570 |
1,544 |
9.7 |
8.5 |
12/20 |
5,782 |
333 |
1,673 |
N/A |
1.7 |
12/21e |
7,555 |
448 |
1,733 |
15.4 |
3.3 |
12/22e |
7,421 |
624 |
1,522 |
8.0 |
5.0 |
Note: *Adjusted numbers account for inventory movements and other one-off items. **Net debt excludes lease liabilities.
Q221 EBITDA supported by petrochemicals business
The good Q221 performance was driven by a record high results in the petrochemicals business and improved operations in fuels marketing, despite weakness in the refining business. In refining, an improvement in benchmark margins ($0.7/bbl versus $0.3/bbl in Q220) and higher sales volumes (up 11% y-o-y) was offset by unplanned maintenance at Hellenic’s Elefsina refinery and higher CO2 emission costs. We expect a significant turnaround in refining earnings in H2, driven by improved fuel demand and higher benchmark margins.
An energy transition pathway
Hellenic is spinning off its refining, supply, trading and petrochemical businesses, subject to the required approvals. The resultant new company structure will support growth of its clean energy activities via appropriate financing as well as increase the company’s value transparency. Hellenic also confirmed its renewable energy sources portfolio target of 2GW by 2030 and the planned start of operation in Q122 of a 204MW photovoltaic (PV) park in Kozani,
Valuation: Blended valuation of €6.80/share
Our valuation is based on the current shape of the company and is derived from a blend of DCF, EV/EBITDA and P/E. Hellenic is trading at a premium to European peers (6.5x FY22e EV/EBITDA versus 5.2x and 8.0x FY22e P/E versus 7.9x). Our blended valuation increases to €6.80/share from €6.73/share, reflecting a higher peer valuation. Our DCF valuation decreases to €7.41/share (previously €7.46), affected by the Q221 results. However, we see potential for upside from the new strategy and plan to update our valuation once we have better visibility.
Strong petrochemicals support earnings growth
In Q221, Hellenic reported adjusted EBITDA of €79m, versus €63m in Q220 and €60m in Q121. This was driven by a record performance in petrochemicals (€45m EBTIDA) due to strong polypropylene (PP) margins (as a result of reduced international PP supply), recovery of auto-fuels demand and improved trading. In the refining business, the positive effect of higher benchmark refining margins was more than offset by unfavourable exchange rate (weaker US dollar) and higher cost for carbon emission rights under a European Union Allowance emissions trading system. Together with other European refiners, Hellenic was affected by the increase in CO2 emission allowance prices (€52/tonne in Q221, up 132% y-o-y) and the reduction in allowances for European manufacturing in phase 4 (2021–2025) of the European Emissions Trading Scheme (11% drop in Hellenic’s allowances for FY21 versus FY20). Additionally, its refinery performance was negatively affected by an unplanned shutdown (resulting in reduced throughput at the flexicoker at its Elefsina refinery), which has now been resolved.
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Exhibit 1: Adjusted EBITDA bridge (Q221 versus Q220) |
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Source: Hellenic Petroleum |
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Exhibit 2: Segmental adjusted EBITDA Q221 versus Q220 |
Exhibit 3: Segmental adjusted EBITDA H121 versus H120 |
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Source: Hellenic Petroleum. Note: Other includes exploration and production (E&P). |
Source: Hellenic Petroleum. Note: Other includes E&P. |
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Exhibit 2: Segmental adjusted EBITDA Q221 versus Q220 |
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Source: Hellenic Petroleum. Note: Other includes exploration and production (E&P). |
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Exhibit 3: Segmental adjusted EBITDA H121 versus H120 |
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Source: Hellenic Petroleum. Note: Other includes E&P. |
Benchmark refining margins are improving
In H121, crude oil prices rebounded to prepandemic levels, averaging US$69/bbl in Q221 compared to US$61/bbl in Q121, and were significantly higher than the Q420 average of US$43/bbl. Although refining margins were weak, because aviation fuel demand in Hellenic’s key markets remained low, rising travel activity has assisted some improvement in Q2. We expect continued improvement in Q3, driven by continued mobility improvement and removal of uncertainty on the decision of the Organization of the Petroleum Exporting Countries and their allies to increase supply (end-July). Refining benchmark margins improved in July and August, reaching $5.2/bbl (fluid catalytic cracking) and $2.6/bbl (hydrocracking) in August, Q321-to-date increase is presented in Exhibits 4 and 5. Management expects higher benchmark margins along with an increase in sales (due to higher demand) should return the refining profitability to mid-cycle levels.
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Exhibit 4: Benchmark margin ($/bbl) for fluid catalytic cracking |
Exhibit 5: Benchmark margin ($/bbl) for hydrocracking |
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Source: Hellenic Petroleum |
Source: Hellenic Petroleum |
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Exhibit 4: Benchmark margin ($/bbl) for fluid catalytic cracking |
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Source: Hellenic Petroleum |
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Exhibit 5: Benchmark margin ($/bbl) for hydrocracking |
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Source: Hellenic Petroleum |
Demand growth is also recovering
Demand for refinery products in the Greek domestic market was low in Q221, affected by travel restrictions. However, gradual lifting of the restrictions in the quarter led to 20% higher auto-fuels demand compared to Q220 (up 34% versus Q121), with consumption in June approaching 2019 levels. Total domestic fuel demand decreased 9% compared with last year, to 1.4m metric tons (MT) (Exhibit 6), because of atypical high demand for heating oil in Q220, which normalised in 2021. Bunkering fuel demand increased to 582k MT (+17% y-o-y). Meanwhile aviation fuel consumption, although rising y-o-y (107k MT versus 25k MT), remained 72% lower comparing to 2Q19.
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Exhibit 6: Domestic market fuel demand (MT 000s) |
Exhibit 7: Aviation and bunkers fuel demand (MT 000s) |
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Source: Hellenic Petroleum |
Source: Hellenic Petroleum |
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Exhibit 6: Domestic market fuel demand (MT 000s) |
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Source: Hellenic Petroleum |
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Exhibit 7: Aviation and bunkers fuel demand (MT 000s) |
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Source: Hellenic Petroleum |
With an improving overall macroeconomic environment, we expect further increases in domestic traffic and air travel, driving demand for road and jet fuel in Greece and neighbouring countries. This should benefit Hellenic in Q321. However, the macroeconomic environment is dependent on COVID-19 pandemic developments.
Financials and changes to estimates
Key changes to our near-term financial estimates are due to improved performance in petrochemicals in FY21 (+10% vs previous estimates) on the back of Q2 results and a decrease in refining forecasts to reflect Q2 results. Our H221 forecast for refining remains broadly unchanged and reflects an expected increase in refining margins and higher production as auto-fuel demand rises (with lifted travel restrictions), partially offset by higher CO2 emission costs. Our FY21 total adjusted EBITDA estimate is 9% below our previous forecast, while our FY22 EBITDA remains mostly unchanged.
Exhibit 8: Changes to Edison forecasts
€m |
Actual |
Edison new |
Edison old |
Difference (%) |
|||
|
FY20 |
FY21e |
FY22e |
FY21e |
FY22e |
FY21e |
FY22e |
Adjusted EBITDA, refining |
187 |
194 |
379 |
253 |
381 |
-23% |
0% |
Adjusted EBITDA, petrochemicals |
61 |
146 |
108 |
133 |
108 |
10% |
0% |
Adjusted EBITDA, marketing |
97 |
117 |
119 |
117 |
119 |
0% |
0% |
Adjusted EBITDA, RES |
- |
- |
18 |
- |
18 |
- |
- |
Total adjusted EBITDA |
333 |
448 |
624 |
495 |
626 |
-9% |
0% |
Associates |
30 |
32 |
10 |
20 |
10 |
65% |
0% |
Adjusted EBIT |
85 |
203 |
377 |
252 |
379 |
-19% |
0% |
Finance costs |
(115) |
(103) |
(85) |
(102) |
(85) |
2% |
0% |
Adjusted net income |
5 |
117 |
227 |
136 |
228 |
-13% |
0% |
Source: Hellenic Petroleum data, Edison Investment Research
Valuation
Our forecasts and valuation are based on the current shape of the company. We do not include future projects presented in Vision 2025, or any capital expenditure or returns associated with them. We await further information about this from the company, although some information may be presented at a capital markets day planned for early Q421.
We value Hellenic using a blend of DCF, leveraged and unleveraged EV/EBITDA, and P/E multiples, arriving at a valuation of €6.80/share, just 1% above our last published estimate (€6.73/share), primarily on account of higher peer group-based valuation.
Hellenic trades at FY22e multiples of 8.0x P/E and 6.5x EV/EBITDA (FY22 EPS and EBITDA assumptions unchanged versus our previous note), compared with the European group averages of 7.9x and 5.2x, respectively. Its EV per complexity-adjusted barrel is higher than the European peer average at $1,419bod. At the same time, it trades at a discount to its US peers on most valuation metrics.
Our DCF valuation has decreased slightly from €7.46 to €7.41 per share due to changes to our FY21 forecasts (lower Q221 results and changes in working capital). Our forecasts for FY22 and beyond remain mostly unchanged. Our valuation is based on cashflows to 2035, using a 7% cost of capital. We incorporate a terminal value, which assumes the unwinding of working capital and 1% terminal growth.
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Exhibit 9: Hellenic valuation |
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Source: Edison Investment Research, Refinitiv. Note: Priced at 3 September 2021. Range in DCF for ±1% WACC. |
Exhibit 10: DCF (€/share) sensitivity to terminal growth and WACC
Terminal growth/ WACC |
-3.0% |
-2.0% |
-1.0% |
0.0% |
1.0% |
5.0% |
9.89 |
10.43 |
11.14 |
12.14 |
13.64 |
6.0% |
8.22 |
8.57 |
9.03 |
9.65 |
10.51 |
7.0% |
6.85 |
7.10 |
7.41 |
7.80 |
8.33 |
8.0% |
5.72 |
5.89 |
6.10 |
6.37 |
6.71 |
9.0% |
4.76 |
4.88 |
5.03 |
5.22 |
5.45 |
Source: Edison Investment Research
Financials
End-June balance sheet showed net debt (excluding lease liabilities) of €1,751m, €79m higher compared to the end FY20 net debt of €1,673m, as H121 cash flow from operations was more than offset by €111m capex (c €47m spent for Kozani PV project). H121 operating cash flow of €72m was negatively affected by increased inventories (€385m) driven by higher oil prices. In H221 we expect net cash flow to be broadly neutral, with our forecast end-FY21 net debt (excluding lease liabilities) of €1,733m.
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Exhibit 11: Net debt and net debt/EBITDA estimates |
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Source: Hellenic Petroleum, Edison Investment Research. Note: Net debt excludes lease liabilities. |
Exhibit 12: Peer group valuation
|
Market cap |
EV |
P/E |
P/E |
EV/EBITDA |
EV/EBITDA |
FCF yield |
FCF yield |
P/CF |
P/CF |
Net debt/ |
Net debt/ |
Div yield |
Refining capacity |
EV/bod of complexity adjusted capacity |
|
Edison estimate – Hellenic |
1,805 |
4,049 |
15.4 |
8.0 |
9.0 |
6.5 |
4.1% |
21.1% |
5.4 |
3.4 |
3.9 |
2.4 |
3.3% |
344 |
1,419 |
|
Grupa Lotos |
2,804 |
3,274 |
9.4 |
8.9 |
4.6 |
4.2 |
-14.7% |
3.9% |
4.1 |
5.1 |
0.7 |
0.7 |
1.1% |
211 |
1,399 |
|
Hellenic Petroleum (consensus) |
2,145 |
4,539 |
20.4 |
8.8 |
8.5 |
6.3 |
2.8% |
-21.7% |
3.8 |
3.3 |
4.3 |
3.2 |
4.1% |
344 |
1,419 |
|
Motor Oil Hellas Corinth Refineries |
1,795 |
3,595 |
8.6 |
6.2 |
7.6 |
5.7 |
-10.2% |
11.7% |
3.3 |
3.3 |
2.4 |
1.8 |
6.9% |
186 |
1,675 |
|
Polski Koncern Naftowy Orlen |
8,375 |
11,680 |
7.9 |
7.9 |
4.2 |
4.2 |
-2.4% |
-3.0% |
3.5 |
3.8 |
1.3 |
1.3 |
1.2% |
718 |
1,768 |
|
Saras |
786 |
1,264 |
- |
- |
9.7 |
4.8 |
5.3% |
12.3% |
5.0 |
3.4 |
4.6 |
2.3 |
0.0% |
300 |
360 |
|
Turkiye Petrol Rafinerileri |
3,139 |
4,764 |
16.1 |
7.4 |
8.9 |
6.0 |
3.8% |
6.3% |
14.4 |
5.6 |
2.9 |
1.9 |
0.5% |
602 |
832 |
|
Europe average |
3,174 |
4,853 |
12.5 |
7.9 |
7.3 |
5.2 |
-2.6% |
1.6% |
5.7 |
4.1 |
2.7 |
1.9 |
2.3% |
394 |
1,242 |
|
CVR Energy |
1,381 |
2,742 |
- |
40.1 |
18.6 |
6.1 |
16.0% |
10.9% |
5.0 |
4.2 |
7.0 |
2.3 |
0.0% |
185 |
1,140 |
|
HollyFrontier |
4,993 |
7,293 |
- |
10.0 |
7.9 |
4.8 |
-7.5% |
10.2% |
8.0 |
4.4 |
1.9 |
1.2 |
2.1% |
457 |
1,277 |
|
Marathon Petroleum |
37,169 |
56,004 |
- |
18.4 |
7.8 |
6.6 |
20.9% |
11.2% |
7.2 |
4.9 |
4.4 |
3.7 |
4.0% |
2,874 |
1,838 |
|
Phillips 66 |
30,493 |
46,152 |
- |
12.1 |
14.0 |
8.1 |
5.4% |
9.2% |
8.0 |
6.8 |
4.1 |
2.4 |
5.2% |
2,184 |
1,921 |
|
Valero Energy |
26,451 |
38,612 |
- |
13.6 |
11.4 |
6.4 |
6.9% |
10.7% |
7.5 |
5.0 |
3.3 |
1.9 |
6.1% |
3,100 |
1,093 |
|
Americas average |
20,097 |
30,161 |
- |
18.8 |
11.9 |
6.4 |
8.3% |
10.4% |
7.1 |
5.1 |
4.1 |
2.3 |
3.5% |
1,760 |
1,454 |
|
Total average |
10,866 |
16,356 |
12.5 |
13.3 |
9.4 |
5.8 |
2.4% |
5.6% |
6.3 |
4.5 |
3.3 |
2.0 |
2.8% |
1,015 |
1,338 |
|
Total median |
3,139 |
4,764 |
11.0 |
8.9 |
8.5 |
6.0 |
3.8% |
10.2% |
5.0 |
4.4 |
3.3 |
1.9 |
2.1% |
457 |
1,399 |
|
Source: Edison Investment Research, Refinitiv. Note: Priced at 3 September 2021. *FX = US$1.19/€
Exhibit 13: Financial summary
|
IFRS; year-end 31 December |
€m |
|
2018 |
2019 |
2020 |
2021e |
2022e |
Income statement |
|
|
|
|
|
|
|
Total revenues |
|
|
9,769 |
8,857 |
5,782 |
7,555 |
7,421 |
Cost of sales |
|
|
(8,770) |
(8,052) |
(5,818) |
(6,665) |
(6,733) |
Gross profit |
|
|
999 |
805 |
(36) |
890 |
688 |
SG&A (expenses) |
|
|
(475) |
(470) |
(453) |
(433) |
(433) |
Other income/(expense) |
|
|
(10) |
6 |
(13) |
3 |
3 |
Exceptionals and adjustments |
|
|
(19) |
2 |
(587) |
281 |
(120) |
Reported EBIT |
|
|
514 |
341 |
(501) |
460 |
258 |
Finance income/(expense) |
|
|
(146) |
(151) |
(115) |
(103) |
(85) |
Profit (loss) from JVs / associates (post tax) |
|
|
(2) |
18 |
30 |
32 |
10 |
Other income (includes exceptionals) |
|
|
2 |
(1) |
5 |
8 |
0 |
Reported PBT |
|
|
369 |
207 |
(582) |
397 |
183 |
Income tax expense (includes exceptionals) |
|
|
(154) |
(43) |
185 |
(82) |
(46) |
Reported net income |
|
|
215 |
164 |
(397) |
315 |
137 |
Basic average number of shares, m |
|
|
306 |
306 |
306 |
306 |
306 |
Basic EPS (€) |
|
|
0.7 |
0.5 |
(1.3) |
1.0 |
0.4 |
|
|
|
|
|
|
||
Adjusted EBITDA |
|
|
730 |
570 |
333 |
448 |
624 |
Adjusted EBITDA margin (%) |
|
|
7.5 |
6.4 |
5.8 |
5.9 |
8.4 |
Adjusted EBIT |
|
|
533 |
339 |
85 |
203 |
377 |
Adjusted PBT |
|
|
388 |
205 |
5 |
141 |
302 |
Adjusted net income |
|
|
296 |
185 |
5 |
117 |
227 |
Adjusted EPS (€) |
|
|
0.97 |
0.61 |
0.02 |
0.38 |
0.74 |
DPS (€) |
|
|
0.75 |
0.50 |
0.10 |
0.19 |
0.30 |
Balance sheet |
|
|
|
|
|
||
Property, plant and equipment |
|
|
3,269 |
3,298 |
3,380 |
3,411 |
3,312 |
Intangible assets |
|
|
106 |
104 |
106 |
109 |
109 |
Other non-current assets |
|
|
529 |
744 |
797 |
821 |
828 |
Total non-current assets |
|
|
3,903 |
4,146 |
4,283 |
4,340 |
4,248 |
Cash and equivalents |
|
|
1,276 |
1,088 |
1,203 |
789 |
1,000 |
Inventories |
|
|
993 |
1,013 |
694 |
1,165 |
1,045 |
Trade and other receivables |
|
|
822 |
840 |
582 |
594 |
557 |
Other current assets |
|
|
3 |
6 |
12 |
57 |
57 |
Total current assets |
|
|
3,094 |
2,947 |
2,492 |
2,605 |
2,660 |
Non-current loans and borrowings |
|
|
1,627 |
1,610 |
2,131 |
1,656 |
1,656 |
Non-current lease liabilities |
|
|
|
169 |
171 |
174 |
174 |
Other non-current liabilities |
|
|
420 |
448 |
294 |
336 |
336 |
Total non-current liabilities |
|
|
2,047 |
2,227 |
2,597 |
2,166 |
2,166 |
Trade and other payables |
|
|
1,349 |
1,402 |
1,547 |
1,693 |
1,607 |
Current loans and borrowings |
|
|
1,109 |
1,022 |
745 |
865 |
865 |
Current lease liabilities |
|
|
|
31 |
30 |
27 |
27 |
Other current liabilities |
|
|
97 |
84 |
8 |
35 |
35 |
Total current liabilities |
|
|
2,555 |
2,539 |
2,329 |
2,621 |
2,535 |
Equity attributable to company |
|
|
2,331 |
2,262 |
1,786 |
2,096 |
2,145 |
Non-controlling interest |
|
|
64 |
65 |
62 |
62 |
62 |
Cashflow statement |
|
|
|
|
|
||
Profit before tax |
|
|
369 |
207 |
(582) |
397 |
183 |
Depreciation and amortisation |
|
|
197 |
231 |
248 |
245 |
247 |
Other adjustments |
|
|
237 |
172 |
233 |
195 |
75 |
Movements in working capital |
|
|
(296) |
26 |
528 |
(460) |
70 |
Income taxes paid |
|
|
(5) |
(149) |
23 |
(40) |
(46) |
Cash from operations (CFO) |
|
|
503 |
486 |
450 |
336 |
529 |
Capex |
|
|
(157) |
(241) |
(288) |
(261) |
(148) |
Acquisitions & disposals net |
|
|
(16) |
(5) |
(6) |
0 |
0 |
Other investing activities |
|
|
311 |
29 |
17 |
10 |
6 |
Cash used in investing activities (CFIA) |
|
|
138 |
(218) |
(277) |
(251) |
(141) |
Net proceeds from issue of shares |
|
|
(1) |
0 |
0 |
0 |
0 |
Dividends paid in period |
|
|
(151) |
(155) |
(154) |
(31) |
(88) |
Movements in debt |
|
|
(97) |
(111) |
252 |
(358) |
0 |
Other financing activities |
|
|
4 |
(160) |
(144) |
(118) |
(89) |
Cash from financing activities (CFF) |
|
|
(244) |
(458) |
(47) |
(507) |
(177) |
Increase/(decrease) in cash and equivalents |
|
|
397 |
(189) |
125 |
(422) |
211 |
Currency translation differences and other |
|
|
5 |
2 |
(11) |
8 |
0 |
Cash and equivalents at end of period |
|
|
1,275 |
1,088 |
1,203 |
789 |
1,000 |
Net (debt) cash (incl. lease liabilities) |
|
|
(1,460) |
(1,744) |
(1,874) |
(1,934) |
(1,723) |
Net (debt) cash (excl. lease liabilities) |
|
|
(1,460) |
(1,544) |
(1,673) |
(1,733) |
(1,522) |
Source: Hellenic Petroleum, Edison Investment Research
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Research: Consumer
PPHE has accompanied news of continued strong leisure-based recovery with an EPRA NAV per share of £20.85 at June 2021, almost unchanged in H121 despite COVID-19 restrictions, highlighting the company’s resilience from a property perspective. Encouragingly, the recent joint venture on prime London assets (Riverbank and art’otel hoxton) not only endorsed this valuation (44% premium to current share price), but also released £114m for future growth to management with an impressive development record, notably a return on Waterloo of c 100% in just four years. Consequently reinforced finances (£238m headroom at June 2021) are enabling steady progress with a £200m+ pipeline and an appetite for post-pandemic opportunities, such as in new areas of Europe and branding.