Doosan Škoda Power: steaming ahead (BUY - initiation of coverage)
We initiate coverage of Doosan Škoda Power (DSP) with a BUY and a 12M price target (PT) of CZK 406/share. DSP is one of the leaders of steam turbines manufacturers, based in the Czech Republic, with more than 150Y of history. Focusing on smaller-scale projects, tailor-made solutions, different turbine applications (gas, nuclear), and leveraging the support of its parent company, Doosan Enerbility, DSP is a unique, high-tech company in the CEE region. DSP benefits from energy transition trends and sees demand for its products, as its order backlog has more than doubled since 2021, to CZK 9.2bn as of YE24. The backlog growth should drive revenue growth. We expect the top line to increase at a 5Y (2023-28E) CAGR of 15.2% and the EBITDA margin to rise by 1.3ppts (13.6% in 2024E), to 14.9%, in 2028E (both around the low end of management’s guidance). With no debt, a resilient cash position, and generating positive FCFFs over our explicit horizon, we expect DSP to pay out 75% of its net profit as dividends, even with the start of its capex cycle. On our estimates, DSP is trading at 16.1-14.4x 2025-26E P/Es and 8.7-7.8x 2025-26E EV/EBITDAs, representing a c.37% discount to its global turbine manufacturers peers and a 12% discount to its CEE peers on the 2025E EV/EBITDA.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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