ADMIE Holding | Electrifying growth
We initiate coverage of ADMIE Holding with a ‘Buy’ recommendation and a €3.3 PT, while adding the stock in our top picks list.In our note, we deep dive into ADMIE Holding, owner of 51% of IPTO, Greece’s electricity transmission network operator. Facilitated by an underleveraged balance sheet (1.5x 2020e Net Debt/EBITDA, vs. >5x gearing for other European regulated utilities), IPTO has committed to an ambitious €5.0bn network development plan over the next decade. This will drive double-digit RAB growth for IPTO, translating into c. 10% EBITDA CAGR over the next five years given the regulated returns, and will filter through to total dividends of >€130m for ADMIE Holding, namely annual yield near 5% on our estimates.
On valuation, the stock trades at a substantial discount to RAB, despite showcasing superior RAB growth in relation to other European regulated utilities (which are usually priced at a premium to RAB). In ADMIE’s case, the market is not only ignoring any potential future outperformance vs the cost of capital or the growth in RAB, but it also seems to imply a negative ROIC-WACC (cost of capital) spread near 60bps for the coming 10 years, on our estimates.
Our PT is based on a blended valuation (RAB-based, DCF, multiples) and effectively (and conservatively) values ADMIE at 5-10% discount to 2021e RAB.
Holding Company ADMIE IPTO SA is a Greece-based company engaged in the electric utilities sector. The Company, through Power Transmission Operator SA, operates as a Transmission System Operator for the Hellenic Electricity Transmission System (Transmission System). The Company holds a concession for the Transmission System operation, maintenance and development. Its Transmission System mainly transmits electricity from Western Macedonia and consists of overhead, submarine and underground transmission lines.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
Eurobank Equities S.A. offers a comprehensive suite of investment products—including equities, derivatives, bonds, and mutual funds—serving over 15,000 private, corporate, and institutional clients in Greece and internationally.
The firm maintains a dominant position in the Greek capital markets, consistently ranking among the top brokers in terms of market share and is repeatedly recognised in major institutional investor surveys as one of the leading brokers and top Equity Research Providers for Greece.
Its multi-awarded Research Division delivers timely insights and fundamental coverage on almost 40 listed companies—representing over 90% of the ATHEX’s market capitalisation and traded value.
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