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ML: HELEX Q3 Net Income Broadly In Line

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Helex reported Q3 net income of EUR4.2mn, broadly in line with Merrill Lynch  EUR4.4mn estimate, the brokerage says in a report dated November 9th.

Its revenue of EUR10.6mn was slightly weaker than its EUR11.2mn forecast, mainly reflecting a fractionally lower than expected yield on cash market turnover. The impact was partly mitigated by costs down 1% year-on-year to EUR5.5mn and slightly stronger than expected interest income (EUR1.3mn vs. our EUR1.1mn forecast).

Given the context of weak volumes, new CEO Socrates Lazaridis has highlighted that his immediate priority is to maintain tight control over costs. 

The company confirmed that Q410 expenses should be in a similar range to the current quarterly run rate of ~EUR5.5mn, ahead of our prior forecast of a step up in Q4 to EUR6.9mn. We continue to assume costs up a modest ~3% year-on-year in 2011. Q4 ADV in line with estimates
Q4 cash market volumes have improved ~30% sequentially to ~EUR124mn per day, supported by a number of rights issues from Greek banks. 

“The improvement in activity is consistent with our prior forecast and we had previously incorporated revenue of ~EUR2.4mn in Q4 resulting from the NBG and Bank of Cyprus capital increases which completed in October,” it says.

The firm raises its EPS forecasts 2% in 2010, 2011 & 2012 reflecting lower cost estimates. “We believe this adequately reflects the uncertain volume outlook and potential threats from new market entrants as market turnover improves. We retain our Neutral rating but raise our DCF derived PO to EUR6.00 (from EUR5.60).”
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