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Research: Energy & Resources
Hellenic Petroleum reported Q2 adjusted EBITDA of €187m, 14% ahead of market consensus and an 18% decrease y-o-y. Realised margins at $10.6/bbl represent $5.8/bbl over-performance relative to the benchmark, partly offsetting a reduction in utilisation due to planned maintenance at Elefsina and Thessaloniki, increased CO2 costs and a stronger euro. Management sees significant improvement in benchmark margins in Q318 providing visibility of continued momentum in refining profitability through 2018. In addition, a high middle distillate yield provides Hellenic with a competitive position ahead of new bunkering fuel specifications. Edison’s blended P/E, EV/EBITDA and DCF valuation stands at €9.0/share, FY18e adjusted EBITDA at €789m and we expect a projected 4.9% dividend yield (excluding incremental returns from DESFA proceeds expected in Q418) to provide share price support.
Written by
Hellenic Petroleum |
Q2 beat driven by refining over-performance |
Q218 results |
Oil & gas |
31 August 2018 |
Share price performance
Business description
Analysts
Hellenic Petroleum is a research client of Edison Investment Research Limited |
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Hellenic Petroleum reported Q2 adjusted EBITDA of €187m, 14% ahead of market consensus and an 18% decrease y-o-y. Realised margins at $10.6/bbl represent $5.8/bbl over-performance relative to the benchmark, partly offsetting a reduction in utilisation due to planned maintenance at Elefsina and Thessaloniki, increased CO2 costs and a stronger euro. Management sees significant improvement in benchmark margins in Q318 providing visibility of continued momentum in refining profitability through 2018. In addition, a high middle distillate yield provides Hellenic with a competitive position ahead of new bunkering fuel specifications. Edison’s blended P/E, EV/EBITDA and DCF valuation stands at €9.0/share, FY18e adjusted EBITDA at €789m and we expect a projected 4.9% dividend yield (excluding incremental returns from DESFA proceeds expected in Q418) to provide share price support.
Year end |
Total revenues (€m) |
Adjusted EBITDA* (€m) |
Adjusted EBIT* (€m) |
Net debt |
Dividend yield (%) |
12/16 |
6,680 |
731 |
522 |
1,761 |
0.0 |
12/17 |
7,995 |
833 |
644 |
1,802 |
4.7 |
12/18e |
7,947 |
789 |
607 |
1,301 |
4.8** |
12/19e |
7,944 |
748 |
566 |
1,043 |
5.4 |
Note: *Adjusted numbers account for inventory movements and other specials. **Dividend forecasts exclude potential shareholder returns from DESFA sale.
Shifting crude mix: Hellenic shifted away from Iranian crude in June 2018, replaced by increased Iraq and Ural volumes. Despite this switch, management has been able to capitalise on an increase in benchmark margins through July and August, which combined with improved utilisation (in the absence of major scheduled shutdowns) should deliver a robust Q3 EBITDA outturn. Petrochemicals delivered a strong performance in Q2 with a 27% y-o-y increase in sales volume and 15% increase in adjusted EBITDA to €27m.
Valuation and forecasts: Edison currently forecasts adjusted EBITDA of €789m for FY18e which will be revised over the course of the year as we get better visibility on the benchmark margin and forex. Currently our forecasts and blended €9.0/share valuation remain unchanged.
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Disclaimer
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Research: Industrials
Medserv has demonstrated the success of its broadened geographic reach with strong H118 revenue growth and improved profitability. With the required investment in equipment and personnel complete, we see greater momentum and improved profitability in H218. We maintain our forecasts.