By Demosthenes Tryga
On May 14, 2024, late in the evening, the announcements on the restructuring of the MSCI indices of the quarterly review are expected. The potential changes will be implemented on June 3, 2024, with investors taking their positions one day earlier. A company’s entry/exit to the MSCI Standard Index brings massive inflows/exits from foreign investors following the index, unlike entry/delisting to the MSCI Small Cap, where essentially nothing changes for the stock.
It is no coincidence that on these four days (4 quarterly reviews) of the year, the turnover of A.A. is usually the highest of the year! It is recalled that the date taken into account for capitalization is one of the last 10 working days of April for the May quarterly review, i.e. from 18 to 30 April 2024. Also, the shares participating in the MSCI Standard Index are now 10, with the largest weighting belonging to National Bank with 16.3% and the smallest to Motor Oil with 5.3%, as shown in the table.
The revisions of the MSCI indices have become quarterly, and the indices are restructured entirely, as were the old semi-annual ones. According to MSCI data, in February 2024 the range of total market capitalization that a company should have to be included in the Standard Index (for emerging markets) ranged between $2.42 billion and 5, $56 billion, while in November 2023 the corresponding market capitalization range was $2.18 billion to $5.01 billion.
So, it is clear that the bar for the current review will be higher, as since January 18, 2024, when the above threshold was announced, the markets are higher.
More specifically, the MSCI World is 5% higher, raising the limit more or less by a corresponding percentage.
At the same time, the capitalization that does not belong to the main shareholders (free float) must exceed 50% of the above limits to enter the index (this criterion does not apply to the existing companies of the index, but only to new entries). That is, the limit of the weighted capitalization for the last revision was about 1.21 billion dollars, which makes it quite difficult for stocks like ELPE, AIA and Titan.
The interest is now focused on the share of ELPE, as they may cover the limit of the total capitalization, however they are far from the limit of the weighted capitalization. However, if, according to press reports, the shareholders of ELPE make available around 20% of the shares they own to the general investing public, then the share will marginally meet the conditions and can be included in the MSCI Greece Standard Index.
In particular, the weighted capitalization will reach 1.3 billion euros, which enables it to be included in the MSCI Greece Standard Index. Whether this will be done at the disposition of the rate or in a regular review is of little importance.
Looking to the future, A.A. sees the upgrade to developed coming in 2025. The opinion of the column is clear: better second in the city than first in a small village called emerging markets!
So, therefore, the limit of 5 companies that the Greek market needs, since the rest of the quantitative criteria are covered, as can be seen in the table, is anything but difficult. Yes, clearly no one knows where the markets will be in a year, however the five in which Mytileneos is marginally distant and followed by Piraeus Bank at a short distance I think will not be a problem for meeting this specific criterion.
Finally, in the current review we do not expect any additions/deletions from the MSCI Greece Standard Index.
For five years, Fourlis underperforms against the GTT
Fourlis reported Q4/12M 2023 financial results, which were broadly slightly higher than market estimates. The d.s. will propose to the regular G.S. the dividend distribution of 0.12 euros per share, with the cut-off date set for June 26, 2024, while the dividend yield reaches 2.8%.
Net debt (loans – cash) stood at €282m at 31/12/2023, with the acquisition of Smart Park at the end of the year contributing to this. The truth is that the share of net lending corresponding to the group’s retail does not exceed 85 million euros at the end of 2023, with the remaining 197 million euros used by real estate management. Trade Estates increased its net asset value (NAV) by 41%, approaching €298.4 million.
Looking ahead, management said in the ETH presentation that for 2024 sales are estimated at €600 million, i.e. 12% growth, while in 2027 sales are expected to approach €750 million. However, what interests us most is profitability, with management estimating an 8% operating margin in 2027, versus 4% in 2023! Behold, for a stock that has systematically underperformed for at least the last 5 years!
Strong start to Q1 US financial results
Overall, 6% of S&P 500 companies have released Q1 2024 financial results. Of these companies, 83% beat market estimates for earnings per share, 3% were in line with estimates , while the remaining 13% were worse than market estimates.
The percentage of companies that beat EPS estimates is above the one-year average (78%), above the 5-year average (77%) and above the 10-year average (74%).
Understandably, historical averages reflect actual results from all 500 companies, not actual results from the 6% of companies that have reported at this point in time.
At a sectoral level, the financials and technology sectors have the absolute number, meaning 100% of the companies that published were above estimates, while the consumer staples and industrials sectors at 2/3 were above expectations.
In conclusion, we have mentioned in the past that it is common for analysts to be more conservative in their estimates and ultimately for companies to show results higher than estimates. However, the above measurements only concern earnings per share, which tells a partial truth. A typical example is the financial sector, where, while all companies that announced up to April 12th were higher than estimates, all stocks with the announcement fell significantly due to the quality of the results. Finally, the negative climate may have intensified the pressures, without however being the cause of the decline.
Agenda (23 – 28/4/2024)
First quarter financial results announcements take over
On Tuesday Sarantis has convened an ordinary general meeting, while Alpha Trust Participations announces financial results for the fourth quarter/12 months of 2023.
On Wednesday Sarantis and Alpha Trust – Andromeda AEEX are expected to announce financial results for the first quarter of 2024, CNL Capital EKES-IDOE and Loulis Food publish financial results for the fourth quarter/12 months of 2023, while an auction of 6-month EGED will be held.
On Thursday Mytileneos is expected to announce the financial results of the first quarter of 2024, EYDAP, Safe Bulkers Participations, Space Hellas and Alpha Real Estate Services announce financial results of the fourth quarter/12 months of 2024, while OPAP and Athens International Airport have convened regular c. p.
The manufacture Logismos, Intertech and Mermeren Kombinat AD Prilep announce financial results for the fourth quarter/12 months 2023, while I. Kloukinas – I. Lappas has convened an extraordinary general meeting. On the same day, the Bank of Greece announces bank financing and deposits for March.
Interest is focused on inflation (Friday) and GDP (Thursday), amid economic results
On Tuesday the manufacturing PMI in Germany and the Eurozone is announced in the morning, while in the afternoon both the manufacturing PMI and the corresponding service PMI are published shortly before new home sales for March. Financial results are published by Freeport-McMoRan, Halliburton, PepsiCo, Philip Morris, Tesla, Visa (Dow Jones – MtK).
On Wednesday in the morning, the business climate index based on April data from the IFO institute will be released, while in the early afternoon, the focus is on durable consumer goods orders for March. Boeing (Dow Jones), AT&T, Meta Platforms (MtK) and IBM (Dow Jones – MtK) are in order of financial results.
On Thursday the first figures for the change in the US GDP in the first quarter are announced, while financial results are published by Bristol-Myers Squibb, Dow (Dow Jones), Honeywell (Dow Jones), Merck & Co. (Dow Jones) and Intel (Dow Jones – MtK).
The manufacture in the early hours, the Bank of Japan’s decision on yen interest rates is announced, while all eyes are on 3:30 p.m., when the PCE inflation index (change in the prices of personal consumption goods) is published, which the Fed takes into account for the course of dollar interest rates. Financial results are announced by AbbVie, Chevron (Dow Jones) and Colgate-Palmolive. Finally, the week closes with the announcement of consumer and inflationary expectations in both the short and long term based on April data.
* Demosthenes Trigas is a Certified Stock & Market Analyst BETA Securities – [email protected]
** Republished from Kefalio newspaper
