ALPHA GA

Publicly traded companies mentioned herein: Alpha Bank AE (ALPHA GA), Eurobank Ergasias SA (EUROB GA), National Bank of Greece SA (ETE GA), Piraeus Bank SA (TPEIR GA)

Highlights

The presenter is long shares of Alpha Bank (ALPHA) at €2.15 and sees the risk/ reward as favorable. Regardless of whether the Greek economy is stable, or recovers, shareholders should see meaningful gains over the next 24-36 months. While risk remains, primarily surrounding a pending deal with eurozone finance ministers and the IMF for €7+ billion in new loans to avoid default, the non-performing loans (NPLs; ~37% of the book) are “not getting any worse”; and ALPHA is seeing deposit inflows. With the stock trading at 2x pre-provision profits, and ~0.35x estimated 2017 book and tangible book value (€6.00 and €5.80, respectively), there is meaningful upside potential. In his opinion, and ALPHA would be more fairly valued at 0.7-0.8x book value, and there is optionality on the release of “excess capital” which can potentially be deployed to shareholders in a more bullish scenario (this is worth another 0.3x on book value).