Jump to content

Looking for Greek Companies With Earnings Primarily from Export - Euro or USD


persistentone
 Share

Recommended Posts

Assuming the Greek default happens, if the economy converts to Drachma, and the Drachma devalues maybe 70% or more against the Euro, this is likely to crash the value of the earnings of most Greek companies.  Which Greek companies are the exception?  Specifically, which Greek companies make most of their earnings from exports to Europe, Asia, or America, and get paid in Euros or USD?

Link to comment
Share on other sites

Intralot has about 95% of revenues from outside Greece and Titan Cement about 75%.  Autohellas has revenue tied to tourism and a car fleet that can be driven to Italy and sold for Euros.

 

Packer

 

Autohellas strikes me as the kind of company that would see increased business volumes, but payment in a devalued currency that might actually result - on net - in worse numbers.

 

Is the cement company making most of its money in southern europe? 

Link to comment
Share on other sites

 

Karelia Tobacco, around 85% from export

 

Karelia is very interesting.  What do you know about their target markets, and what's the reason for the high growth levels?

 

Well, the last year was very good because of currency gains. Strip that out and its wasn't THAT phenomenal. Otherwise, I don't exactly know why they are growing so much. I can say that they have a small market share so it is easy to expand.  I get the impression the management is very good.  They are also expanding capacity so that may further increase sales. In addition, their margins I noticed were a bit worse than PM, so that will improve with the new equipment they bought.

Link to comment
Share on other sites

 

Hey all, I am always paranoid and I try to dream up worse case scenarios. I am not at all afraid of Grexit doing damage to my companies. However, I sometimes wonder, if the country decides not to abide by international laws, can they possibly nationalize foreign owernship in Greek companies? Like my shares? Is there any precedent?

 

thanks

Link to comment
Share on other sites

Yes it's possible. Look up ctcm, it's a media company in Russia. I for one thought the issues with sanctions against Russia wouldn't impact a small local media company. I thought I was being contrarian and smart by avoiding banks or resource companies there. Then out of the blue ( at least for me), they pass a law limiting foreign ownership in media companies. From 80/20 in favor of foreign ownership,  ctcm was suddenly required to figure out a way to get to 20/80. It's been downhill for ctcm since that law was passed.

 

Moral of the story is when things start getting crazy,  you can never underestimate the extent of craziness.

Link to comment
Share on other sites

Yes it's possible. Look up ctcm, it's a media company in Russia. I for one thought the issues with sanctions against Russia wouldn't impact a small local media company. I thought I was being contrarian and smart by avoiding banks or resource companies there. Then out of the blue ( at least for me), they pass a law limiting foreign ownership in media companies. From 80/20 in favor of foreign ownership,  ctcm was suddenly required to figure out a way to get to 20/80. It's been downhill for ctcm since that law was passed.

 

Moral of the story is when things start getting crazy,  you can never underestimate the extent of craziness.

 

Just checked it out. I feel your pain man.

Link to comment
Share on other sites

 

Karelia Tobacco, around 85% from export

 

Karelia is very interesting.  What do you know about their target markets, and what's the reason for the high growth levels?

 

Well, the last year was very good because of currency gains. Strip that out and its wasn't THAT phenomenal. Otherwise, I don't exactly know why they are growing so much. I can say that they have a small market share so it is easy to expand.  I get the impression the management is very good.  They are also expanding capacity so that may further increase sales. In addition, their margins I noticed were a bit worse than PM, so that will improve with the new equipment they bought.

 

Tobacco is hella profitable.  I don't think you compare a company like this to PM on margins.  The limitations on growth for a small company like this would be shelf space - basically distribution costs - due to competing against so many huge brands.

 

Is there any product differentiation or competitive advantage?

Link to comment
Share on other sites

One indicator of nationalizations is the number of external defaults in the 20th century.  Greece only had 1 (1932) but Russia had 3 and Turkey 5.  So on a relative scale Greece is better.  BTW Germany and Austria had 2 each.

 

Packer

Link to comment
Share on other sites

 

Karelia Tobacco, around 85% from export

 

Karelia is very interesting.  What do you know about their target markets, and what's the reason for the high growth levels?

 

Well, the last year was very good because of currency gains. Strip that out and its wasn't THAT phenomenal. Otherwise, I don't exactly know why they are growing so much. I can say that they have a small market share so it is easy to expand.  I get the impression the management is very good.  They are also expanding capacity so that may further increase sales. In addition, their margins I noticed were a bit worse than PM, so that will improve with the new equipment they bought.

 

Karelia has too much free cash flow and very little capex.  Why aren't they buying back shares? 

 

Separately, if they would find a way to decrease their book value, then they would increase their return on equity and the market would reward them with a higher multiple.

 

Link to comment
Share on other sites

 

Hey all, I am always paranoid and I try to dream up worse case scenarios. I am not at all afraid of Grexit doing damage to my companies. However, I sometimes wonder, if the country decides not to abide by international laws, can they possibly nationalize foreign owernship in Greek companies? Like my shares? Is there any precedent?

 

Of course it could happen.  They are communists and it's clear they don't think like capitalists.  That said, look at self-interest.  They don't want to pay back the debt, so they are defaulting.  What would be the advantage of closing their capital markets to foreigners, thereby completely starving Greek companies of capital?  It's not like Brazil where so many foreigners came in that the currency was rising out of control.  It's not clear how they would even benefit from capital controls on the stock market.

 

In any case, I wouldn't dream of investing in Greece today.  I want the default to be a done deal, Drachma a done deal, and I'm looking for the new currency to sell off steeply and then start to stabilize.  That's the point I start thinking of making an investment in the Greek stock market.  If there are going to be stock market capital controls, I hope we find out about those sooner rather than later.

Link to comment
Share on other sites

Guest Schwab711

Here's a paper by some Harvard professors discussing the effects of the Argentina (near-) default in 2011 on equity returns. They also forced (foreign) investors to restructure debt with 30% recovery (avg is 26% globally). They also saw 40% inflation and the Peso devalued from even to 4:1 against USD (75% loss in value)!

 

we conclude that the recent Argentine sovereign default episode caused a cumulative 33% drop in the ADR index from 2011 to 2014. We find suggestive evidence that banks, exporters, and foreign-owned firms are particularly affected

 

http://scholar.harvard.edu/files/schreger/files/hebert_schreger_v1.pdf

 

Moody's report on recovery rates assuming default:

https://www.moodys.com/sites/products/DefaultResearch/2007400000587968.pdf

Argentina had a pretty severe 3-4 year drop in their stock market after the 2001 default as well. The Asian currency crisis seems like a bad example to me because of the politics of the region, but the 1982 Mexican crisis ended in a long period of moderate stagflation called "the Lost Decade".

 

I think the best model for Greece is something from high debt ratio/fixed currency to free floating currency after restructure. Mexico and both Argentina events are the only post-ww2 examples.

 

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...