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ADMIE Holding | Empowering the Greek Energy Transition

Outperformer yet still an outlier, trading at a discount to RAB… – Following the WACC uptick to 7.5% in mid-2023, IPTO went on to post a robust FY’23 performance, with EBITDA surging 43% yoy to €278mn while being on track to grow another 20% in FY’24e. ADMIE’s stock has mirrored the strong operating momentum, rallying 30% in 2023, followed by a 19% return in 2024, outperforming both Greek non-fins and its EU peers. Despite this impressive share performance, ADMIE still trades at a 10% discount to 2024 RAB and >20% discount to its EU peers, yet IPTO leads EU network operators in terms of RAB growth, with our estimates indicating a 16% CAGR through 2026.

Among the highest RAB growth profiles in Europe – The scheduled commercial operation of the Attica-Crete interconnection in mid-2025, with an estimated RAB of >€710m, is poised to drive sequential RAB step-ups of 22/17% in 2025-26e, with RAB ultimately reaching €3.6bn by 2026 (from just €2.5bn in FY’24e). The particular project represents a milestone for IPTO, since the related accumulated capex has not been included as WiP, and IPTO is yet to be compensated for its investments. Moreover, this project will be entitled to a 1% WACC premium, being deemed as project of major importance, and is thus set to boost revenues by €80m (17% of FY’24e) upon full operation.

… thanks to >€8bn investment plan… – IPTO’s 10Y network development plan encompasses a €6.1bn investment pipeline, which expands to >€8bn when including the under-construction €1.9bn Greece-Cyprus interconnection. Following the successful negotiations between the affiliated parties, IPTO looks set to begin receiving compensation for the project in 2025 driving a 6% boost to revenues by 2026e. Recent press reports emphasize the project’s strategic significance, noting strong investor interest from international funds for equity participation, which could unlock further value for ADMIE shareholders.

Robust profitability growth ahead; emerging as a dividend play – We estimate the 2-digit RAB growth to drive a 7% EBITDA CAGR over 2024-26, which results in a c17% uplift to our 2025e EBITDA (to €358m). We expect the higher profitability to result in the doubling of cash dividend payments post 2025 (DPS at €0.12/0.15 in 2025/26e), corresponding to a compelling 5-6% yield. Despite increased dividend payments and record level capex in 2025/26e (+35/77% vs FY24e), we expect leverage to remain at reasonable levels – from a sector perspective – with net debt/EBITDA staying 250bps through to 2026e.

Valuation: Lifting PT to €3.80/share, reiterating Buy – Incorporating higher 2024-25e and rolling fwd our DCF & EV/RAB-based valuation to 2025, we raise our PT to €3.80 (from €3.2 previously), still placing the stock at a 6% discount to 2025e RAB. Indicative of the valuation dislocation embedded in the share price is the observation that the market is not only ignoring the growth in RAB, but also seems to imply a negative ROIC-WACC spread of 5-10bps for the next 5 years.