What does joining MSCI mean for the share in PPC?

By Harry Floudopoulos

The beginning of the new era for the PPC share, after the capital increase and the entry of 150 million new shares, coincided last week with its inclusion in the MSCI index. In fact, on the first day of trading of the new shares, a trading record was set, as some shareholders who participated in the increase rushed to secure immediate profits, after a significant demand for the title of the company, due to its membership in MSCI. Despite the fact that there was a significant offer, the share price was kept high, above 10 euros, while one after another the stock exchanges give target prices at the level of 15 euros.

Turnover record

Last Wednesday was a historic day for PPC’s share for several reasons. The first, because the 150 million new shares of the capital increase were traded. The second, because the information that wanted the company’s share to enter the MSCI index was confirmed. On this day, the trading volume reached 22.7 million and the trading volume was 234.3 million euros, when the total market turnover reached 306 million euros. That is, PPC transactions represented 76% of total transactions in the Greek market. Despite the increased volume and the significant offer that came mainly from investors, who wanted to secure profits of 1 – 1.5 euros per share after the capital increase, the share remained at 10.32 euros, with losses of 0.96 euros . Behind the strong resistance of the stock is the demand, which was manifested mainly by passive funds (investing funds) that invest based on the MSCI index. According to information, out of the 243 million of the turnover, the 150 million came from the entry in the share of the specific funds.

It is recalled that, with an extraordinary announcement made by MSCI after the successful increase of PPC’s share capital, the company’s share was included in the Standard and Mid Cap indices, from the MSCI Small Cap index of emerging markets, in which it was previously. This is because after AMK PPC acquired the necessary size to be included in the index, as the limit is at $ 2.95 billion capitalization. After the capital increase, the capitalization of PPC is approaching 4 billion euros (3.93 billion euros). It is noted that the Greek shares that are in the basic indices of MSCI are five: OTE (with a weight of 29.5%), OPAP (with a weight of 20.82%), Alpha Bank (with a weight of 20.27%), Eurobank Holdings (with weighted 17.22%) and Jumbo (weighted 12.17%).

Predictions

After the successful completion of AMK, moreover, the market raises the bar higher for the share of PPC, as shown by the analyzes of the stock exchanges. Specifically, Piraeus Investment last week increased the target price to 15 euros with a recommendation of overperformance (“Outperform”). According to the relevant report, AMK and the sale of HEDNO will allow PPC to finance its capital expenditure plan, of 6 billion euros, by 2024 (with 70% going to Renewable Energy Sources (RES) and the distribution), while maintaining the net debt to EBITDA ratio below 3.5x. It was preceded by the Eurobank Equities report on November 8, which gave a target price of 14.5 euros and a market recommendation (“Buy”). The stock exchange stated that the business plan of the company seems feasible, with a lower risk compared to that related to the development of RES projects, due to the position of PPC in the market and its green transformation.