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Edison Investment Research Limited London, UK, 7 May 2019 Edison initiates coverage on ADMIE Holding (ADMIE) ADMIE Holding offers exposure to growth in the Greek electricity transmission grid IPTO, a regulated utility with significant growth opportunities from investments in new transmission lines. IPTO's underleveraged balance sheet (0.9x adjusted net debt/EBITDA at the end of 2018) sustains a c EUR4bn investment plan, which we estimate will result in a regulated asset base (RAB) CAGR of 11% in 2018-27. Although we believe the regulatory allowed rate of return is set at a level in line with cost of capital and the company has strong growth potential, ADMIE Holding's current share price implies a c 40% discount to 2019 equity RAB (including work in progress) and a more than 20% discount to EU regulated utilities' P/E multiples. Despite the growth potential, the stock is trading at a discount of c 30% to average European regulated utilities' P/E ratios. We believe the current allowed regulatory rate of return for IPTO is broadly in line with the cost of capital, even though the stock is trading at a c 40% discount to FY19 equity RAB. An RAB-based valuation of EUR2.83/share implies c 60% upside to the current share price. While a key risk for our investment case is a delay in the implementation of the capex plan, which would result in a lower earnings and dividend growth outlook, we note that the current valuation does not appear to incorporate any growth potential. to Edison's content to receive reports by email. Edison is authorised and regulated by the . Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information please contact Edison: Dario Carradori, +44 (0)20 3077 5700 Learn more at and connect with Edison on:
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