Following a particularly strong half-year for the refining sector, both in terms of margins and profitability, supported by tight available capacity and geopolitical impacts on supply, the conflict with Iran further exacerbated the imbalances between supply and demand, leading to an explosive rise in cracks for diesel and jet fuel (Jet Fuel), notes Optima Bank in its analysis of Helleniq Energy.
Following the recent ceasefire, crude oil prices quickly returned to pre-war levels, while cracks retreated somewhat, though they remained at high levels.
In our view, lower global crude oil refining volumes this year and the reduction in inventories—which will take time to replenish— will continue to support refining margins for a longer period than previously expected, the analysts write.
Furthermore, the resumption of maritime transport through the Strait of Hormuz and the restoration of a steady supply of crude oil are making it possible to secure larger discounts on supplies (since during April and May, crude oil supplies were secured at a premium), further strengthening benchmark margins.
According to the International Energy Agency (IEA), global oil demand is projected to decline by a relatively modest 1.1 million barrels per day in 2026, while supply is estimated to be 3.9 million barrels per day lower.
For 2027, demand is expected to rebound by 2 million barrels per day, while supply is projected to increase by 8 million barrels per day.
Overall, we have factored into our estimates an increase in refining margins of approximately $3 per barrel on an annual basis for 2026, despite lower production at HELLENiQ ENERGY due to major general maintenance at the Aspropyrgos refinery and scheduled maintenance at the Thessaloniki refinery during the fourth quarter of 2026, they continue.
HELLENiQ ENERGY continues to optimize its retail network by increasing the number of company-owned gas stations, which offer higher profit margins through sales of higher-octane gasoline and the cross-selling of non-fuel products.
The petrochemicals sector, following a prolonged period of global oversupply that drove polypropylene (PP) margins to historic lows, is showing a strong recovery due to the conflict with Iran, while a gradual further improvement is expected from 2027 onward, supported by tighter production capacity.
The target of 1.5 GW of installed capacity in Renewable Energy Sources remains unchanged, with the Group primarily expanding its capacity in the less mature markets of Bulgaria and Romania, while ENERWAVE aims to increase its market share in electricity supply and develop more flexible thermal generation.
Finally, hydrocarbon exploration and development activities are maturing, with the final investment decision (FID) for an exploratory well in Block 2 expected in the first quarter of 2027.
We value HELLENiQ ENERGY using a combination of the discounted cash flow (DCF) model and comparable multiples, applying distinct multiples to the estimated EBITDA for 2026–2027 for the refining, petrochemicals, trading, and renewable energy businesses, they continue.
This methodology results in a new target price of 12.90 euros per share, compared to the previous target price of 9.80 euros, implying an upside potential of 17.2%. Consequently, we are upgrading our recommendation for the stock to “Buy” from “Neutral.”
The stock is currently trading at a P/E ratio of 5.2x for fiscal year 2026 and an EV/EBITDA ratio of 5.0x, representing a discount of approximately 35% relative to peers in terms of P/E and significantly lower than its mid-cycle valuation.
We have upgraded our previous estimates for the Group’s adjusted EBITDA by approximately 180–280 million euros, to €1.296 billion and €1.210 billion for 2026 and 2027, respectively, due to a more favorable-than-expected environment in refining.
Accordingly, the Group’s adjusted net income is now estimated at 619 million euros for 2026 (a 57.7% upward revision) and at 528.5 million euros for 2027.
With regard to free cash flow (FCF), taking into account operating cash inflows of 1.1 billion euros for the current year and capital expenditures of 650 million euros, we expect strong free cash flow of €459 million (and €323 million after interest payments).
Taking into account dividend payments of 183 million euros, we estimate that net debt will decrease by 110 million euros, to 2.24 billion euros.
For the period 2027–2028, we forecast average annual free cash flow of 366 million euros (after interest) and dividend payments of 214 million euros (0.70 euros per share). As a result, net debt is expected to stand at approximately 2.2 billion euros in 2027 and 2.0 billion euros for the 2027–2028 period, with the net debt-to-EBITDA ratio remaining below 2 times.
As for the dividend per share, we have factored into our forecasts a distribution of 0.70 euros per share for fiscal years 2026–2028, compared to 0.60 euros for fiscal year 2025, which implies a dividend yield of 6.4%.