23 January 2009
Greek small and mid caps
2009 focus: Show me
the cash
Looking for low-geared Free Cash Flows
For 2009, we believe the ability to
minimize FCF churn is going to determine
stock outperformance. On that, our most
preferred stocks are Ellaktor and Terna
Energy and our least preferred are Folli-
Follie and Intralot.
George Spais, M.Sc
Research Analyst
(302) 10 725 6173
george.spais@db.com
Dimitris Giannoulis
Research Analyst
(302) 10 725 6174
dimitris.giannoulis@db.com
Deutsche Bank AG/London
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research
is available to customers of DBSI in the United States at no cost. Customers can access IR at
http://gm.db.com/IndependentResearch or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Table of contents
Greek SMC outlook 2009 ................................. Page 03
Most preferred stocks...................................... Page 11
Least preferred stocks ..................................... Page 13
Company pages................................................ Page 16
Most Preferred stocks
Ellaktor S.A. (HELr.AT),EUR8.7 Buy
Terna Energy ((TENr.AT),EUR7 Buy
Least preferred stocks
Folli-Follie Sell
Intralot Sell
Global Markets Research Company
The most and least preferred among Greek SMCs
As the macro scenario has deteriorated significantly, we believe that only those
companies with strong balance sheets to support focused business plans, as well
as committed and consistent management, will be able to weather the storm and
at least stem the loss of -- if not create -- shareholder value during the current
turbulent times. Our most preferred stocks among Greek SMCs are Ellaktor and
Terna Energy, while our least preferred stocks are Folli-Follie and Intralot. We
focus on four common themes for 2009: debt, sales growth, operating margins
and cash management/free cash flow.
Funding and cash flow sustainability: the key determining factors
Under the current credit draught scenario, we believe that only those companies
which have sufficient access to funds will generate sustainable shareholder value
through investments. Thus the leverage position and defensive cash flows are the
two key factors which determine access to funds. In our view, Ellaktor and Terna
Energy, with 2009E net debt/EBITDA ratios of 1.3x and -0.5x, respectively, have
relatively less new funding and re-funding risks, thus enhancing their chances of at
the very least protecting shareholder returns.
Greek economy under deceleration pressure; EU in recession
Our economists estimate Greek and Euroland GDP will shrink by 0.8% and 2.5%
in 2009, respectively. Our economists also estimate the debt level in the Greek
economy will reach 104% of GDP in 2009, with a budgetary deficit at 5.5% of
GDP (“Focus Europe” report dated 16 January 2009). Meanwhile, S&P has
downgraded Greece’s credit rating, indicating structural weakness in Greece’s
fiscal management. These external dynamic changes could prove testing for Greek
SMC companies, which may face significant profitability margin declines and a
lack of credit for funding investments. In our view, this makes cash management
the primary differentiating factor for stocks.
Greek SMC stock downfall: short-term pressure vs. long-term opportunity
Greek SMCs (FTSE/ASE40 as a proxy) have corrected by c66% over the past 12
months and 9% YTD, vs. the 62% 12-month decline and c10% YTD decline of the
Athens General Index (ATG). In general, this downfall offers selective opportunities
for long-term upside; however, investors should look for a good balance between
cash ownership, cash generation outlook and gearing levels. Our most preferred
stocks are companies with distinctively visible cash-generating business, such as
Ellaktor and Terna Energy. Our least preferred companies occupy the opposite
side of the spectrum, with weakening FCF outlook.

Table of Contents
Greek small and mid caps: Outlook 2009........................................ 3
SMC corrections: For good? .....................................................................................................3
Main themes: Debt, deflation and cash ....................................................................................3
Greek SMC businesses – still highly introverted.......................................................................9
Most and least preferred stocks .............................................................................................11
Greek SMCs most and least preferred: Company pages ............. 16
Ellaktor S.A....................................................................................... 18
Terna Energy SA.............................................................................. 20
Least preferred stocks..................................................................... 22
Folli-Follie ......................................................................................... 24
Intralot S.A ....................................................................................... 26
Appendix A: Other stocks in the Greek SMC coverage universe 28
Appendix B: DB Key macro forecasts ............................................ 39
Appendix C: DB SMC stock multiples............................................ 40
Appendix D: Greek SMC ROE and ROCE progression ................. 41
Appendix E: Greek 5-year CDS and yield spread for the Greek 10-
year bond and the German 10-year bond...................................... 46
Appendix F: Index performance: FTSE/ASE 40, FTSE/ASE 20 and
ATG................................................................................................... 47