The (non)public offering and the extraordinary dividend

The (non)public offering and the extraordinary dividend
The (non)public offering and the extraordinary dividend

By Demosthenes Tryga

OPAP’s H1 2023 key financial figures were generally in line with market estimates with a positive surprise significantly higher than market estimates ex-dividend for fiscal year 2023. In particular, the ex-dividend amounts to 1 euro per share with the current ex-dividend yield of exceeds 6.2%! The question that arises is whether the total will exceed the market estimates of 1.50-1.55 euros per share (dividend yield of 9.5%) or has the company simply postponed the distribution of the dividend?

OPAP’s average dividend yield over the last 20 years is close to 9% without a single year in which it did not distribute at least 3% (2013). Last year’s dividend yield exceeds 9% (share price at the end of the year), while market estimates before the announcement of the pre-dividend were slightly higher than last year. From Thursday, November 2, 2023, OPAP shares will be traded on A.A. without the right to the interim dividend (1 euro) for the year 2023 while the payment will start on November 9, 2023.

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

On the occasion of the announcement of the financial results for the first half of 2023, the company announced that it will not continue the dividend reinvestment program that resonated with the investment public and especially with long-term investors. The column’s estimate is that the company’s announced share buyback program will partially replace a portion of the potentially additional dividend. That is, the dividend for the entire year may exceed last year’s, but not to the extent of the increase we saw in the pre-dividend (233% increase). A basic condition of the above estimate is that the part of the 150 million euros allocated for 2023 will be used for the purchase of own shares.

The purchase of own shares is an indirect reward to the medium-long-term shareholder as through the purchase and subsequent cancellation of own shares the earnings per share increase. If the share buyback is not used then the dividend yield could improve further than estimates and the total dividend could increase significantly.

It is recalled that the company owns 1,829,624 own shares (0.54% of the total) with an average acquisition price of 7.92 euros per share according to the accounting statements of June 30, 2023. After the last intra-company transfers, the main shareholder VALEA FOUNDATION through Allwyn Greece & Cyprus Holding 2 Ltd (AGCH2) owns 50.18% according to the official figures of the A.A.

It is worth pointing out that the increase in the percentage of the main shareholder above 50% is not a reason for a mandatory public offer as it was achieved by the exercise of the reinvestment program (scrip dividend), which is a form of increase in share capital. Thus, in the way that the critical rate of 50% was reached, it is exempted from the obligation of the mandatory public offer! The major shareholder has the right to make an optional public offer at any time.

In conclusion, at the valuation level, OPAP forms an EV/EBITDA ratio of 7.9 times the estimated operating profits of 2023, i.e. 18% lower than the 10-year average, while the estimated P/E for 2023 does not exceed 12 times. Finally, calculating according to the rule of 72 (72/9=8) in 8 years the investor who will reinvest the OPAP dividends (average dividend yield 9%) will have doubled his capital, without taking into account the change of the share price.

For the fifth consecutive month, foreign investors on the A.H.E.

The participation of foreign investors in the total capitalization of the Greek market in August fell to 62.8% compared to 63.20% on July 31, 2023, recording a decrease of 40 bp. in a continuous slide of foreign investors. Not including the participation of the HFSF (3.9 billion euros or 4.9%) in the total capitalization of the Greek market, the participation of foreign investors amounted to 66.03%. The capitalization of A.A. on 31/08/2023 it was estimated at 80.08 billion euros against 81.25 billion euros in the previous month, i.e. a contraction of 1.43%.

In terms of capital flows, foreign investors continued to sell for the fifth consecutive month with average net outflows over the last 5 months standing at €112 million. In particular, foreign investors had net outflows in August of 80 million euros with the total balance for 2023 reaching 283 million euros. The three largest net inflows of foreign investors for August came from Ireland with €33 million, Luxembourg with €2.6 million and the Cayman Islands with €2.5 million. At the same time, the three largest outflows came from France with 32.9 million euros, the USA with 31.5 million euros and the United Kingdom with 16.6 million euros.

Foreign unitholders made 62.3% of total transactions (buys & sells) 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 €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 the Q2 2023 earnings conference call, marking the fourth straight quarter of decline since the peak in Q2 2022. The number of companies in S&P 500 that mentioned the word “recession” on its Q2 2023 earnings conference call was 45% below its Q1 2023 number, 58% below its Q4 2022 number and 74% below its peak second quarter 2022.

Notably, 62 is below the 5-year average (82) and slightly higher than the 10-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 Q2 2023.

If we take into account recent history we will see that after the high of the first quarter of 2020 (Covid 19) the decline in the number of times the word “recession” is mentioned gave higher values ​​for the S&P 500 index. In fact the low of the current movement for the S&P 500 was reached in Q3 2022 just after the quarter (Q2 2022) with the highest number of times the word “recession” was heard.

Finally, it is clearly not an indicator to proceed with buying and selling, however it is an indication that the “fact” has usually been incorporated into the prices and most of the time the “unknown” for investors is what determines the upcoming trend of the markets. As it stands the market seems to be getting complacent about a potential recession in the US We’re holding on to this for now!

Agenda (19/09/23 – 24/09/23)

The announcements of the financial results of the first semester are completed

Today, Tuesday, Alpha Astika Akinita and Premia Properties are expected to announce the financial results of the first semester, COSTAMARE PARTICIPATIONS has convened a regular G.S. and will publish the financial results for the first half of 2023 On Wednesday, Cenergy is expected to announce the financial results for the first half while the Bank of Greece is expected to announce the balance of payments for July. On Thursday, TERNA Energy (after the closing of the Stock Exchange), 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 has convened a regular G.S.

All eyes on the Fed on Wednesday

Abroad today, Tuesday, the inflation of the Eurozone for August is announced, while in the afternoon the building permits for the same month are published in the USA. On Wednesday it is the turn of Great Britain to announce inflation for August and Germany’s producer price index for the same month. However, the news of the day and of the week is the Fed’s decision on the dollar interest rates, which will be announced at 21:00 and the market estimates to speak of unchanged at 5.5%! On Thursday it is the turn of the central bank of Switzerland to announce the interest rates of the Swiss franc where they are at 1.75%. In the afternoon in the US, the Philadelphia Fed industrial index for September and the sales of second-hand homes for August are announced. On Friday, the week closes with the announcement of the services index from the S&P PMI based on September data.

* Demosthenes Trigas is a Certified Stock & Market Analyst BETA Securities – [email protected]

** Republished from Kefalio newspaper

The article is in Greek

Tags: nonpublic offering extraordinary dividend


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