Another issue is being highlighted today by BN, following the major revelations it has made recently regarding GEK TERNA and its exorbitant valuation. Already, following the Waterloo of its bond issuance, the stock collapsed, somewhat improving valuation metrics that had reached the stratosphere. The bond, naturally, because it targeted international investors, could not secure pricing of the kind banks manage in Greece—an issue also brought to light by BN. In other words, issuances carry low coupons, which is why they struggle to reach par (100) and trade lower. However, you read about the bond details a few days ago. What is happening, though, with another holding of GEK TERNA, that of EYDAP? The stock has hit a 26.5-year high, reaching levels reminiscent of the era when "green floppy disks" were fed into the system to prop up the stock market before elections.
Is the valuation justified?
Information indicates that GEK TERNA wants the share price to reach 20 euros so that its valuation hits 2 billion euros, making GEK TERNA's stake worth around 250 million euros to serve as collateral for the bond loan it intends to issue. Today, EYDAP's stock stands at 13.88 euros, posting an increase of approximately 77% since the beginning of the year. Obviously, despite tariff hikes, the investment program, and the integration of municipalities, financial figures are improving, yet a valuation of 2 billion euros—as well as the current 1.44 billion euros—is considered high. This is because this year's profits are expected to hover around 50 million euros, thus failing to justify such a high P/E ratio.
Why is the stock rising?
The stock price increase desired by GEK TERNA is intended to facilitate its use as collateral for the bond issuance. A higher valuation implies a greater asset value, even if the valuation is already stretched.
Are transactions being monitored?
How, then, is buying interest in the stock materializing? Is GEK TERNA buying? The stake has not changed recently and remains at 12.7637%, according to disclosures in EYDAP's first-half financial statement. If GEK TERNA were buying, it would have issued a fresh announcement. Obviously, other accounts are buying. If something is occurring outside regulatory boundaries, we presume competent authorities are monitoring and would have intervened. Therefore, those buying are holding.
GEK TERNA plunges
The stock plunged during last Friday's session in the aftermath of the eurobond issuance postponement caused by prevailing market conditions. By the close, an attempt was made to "beautify" the picture, and losses were significantly pared.
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