Hellenic Bank shares hit record high in Cyprus

Hellenic Bank Pcl (HB) shares raced to a new record high Tuesday closing at EUR 5.26 on the back of speculation that the bank has surpassed the minor shock from the credit crunch witnessed in international markets and following timely positioning, is in fact benefiting from the general rebound in capital markets overseas.

At the end of September, HB, similar to its peers is reported to have booked minor revaluation losses following the tightening of spreads abroad, but the favourable movement in markets since the new quarter started is believed to have recovered most of the valuation losses, leading analysts to expect another stellar performance in the fourth quarter.

Last week’s pressure on the stock appears to have been “digested” by the market after a number of hedge funds headed for the exit. The hedge fund sales were apparently absorbed by Citigroup buying, leading HB shares to close Tuesday at a new high of EUR 5.26 on the Cyprus Stock Exchange.

Since the start of the year, HB shares are up 58.4% according to Financial Mirror data, well ahead of the 28% gain scored by the CSE General Index and 20% and 35% gains recorded by Bank of Cyprus and Marfin Popular Bank respectively.

Having broken above the previous high, the technical charts suggest that the rally may continue towards EUR 5.50, which is backed by fundamentals since HB is on track to deliver EUR 114 mln in net profit for 2007, nearly double the EUR 58 mln reported in 2006.

Based on the EUR 5.26 closing price, the 2007E p/e ratio of HB is 12.5 times according to Financial Mirror calculations while the price to book value is 3.3 times.

Reports that HB may seek a dual listing on the Athens Stock Exchange are considered to have no major impact on current prices and prospects in view of the fact that foreign investors, including Greek investors, have easy access to HB shares through the common trading platform with the ASE.