MYTILINEOS | Attention turns to Power
In this report we offer an updated viewpoint on the group’s main operating segments. We argue that metallurgy should no longer be a source of concern despite drop in LME. We believe the market is overreacting to the USD metal price change amidst increased volatility on the back of the US-led trade war saga, while overlooking the fact that tight supply helps maintain alumina prices at healthy levels.Furthermore, power has become a focal point amidst favourable operating dynamics due to an improving macro backdrop (higher electricity demand) and higher carbon emission costs rendering gas-fired units more competitive.
Finally, EPC is picking-up momentum as long-awaited projects in Africa (Ghana & Libya) seem to be progressing and there’s significant backlog replenishment (Slovenia). On top of the “traditional EPC†projects, backlog relating to the relatively new METKA EGN activity (construction of solar parks) provides further support, despite coming in at lower margins on our numbers.
We reiterate our Buy rating and set a new target price of €13.40, which effectively values the group at c 5.8x 2019e EV/EBITDA.
Mytilineos Holdings is an industrial group engaged in the sectors of Metallurgy, EPC, Energy, and Defence. Co. and its subsidiaries are engaged in three main operating business segments: Metallurgy, Constructions and Energy. Co. and its subsidiaries monitor its performance on Metallurgy and Mining Sector through the subsidiaries Aluminium S.A. (Alumina-Aluminium) and Sometra S.A. (Zinc-Lead). Co., through its subsidiary, METKA S.A., is an EPC Constructor in Greece.
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.
Research is the backbone of Eurobank Equities' platform, with a team of 4 professionals committed to generating actionable investment ideas by providing timely research products. We are committed to offering value-added services to clients by filtering market noise and providing insights on the multiple sectors that we cover. Our universe includes 26 - large, medium and small cap - companies whose market capitalization amounts to 80-85% of the total market capitalization of the Athens Stock Exchange. Our research team also maintains the capacity to generate ad-hoc research for micro-cap listed companies.
Our team has consistently gained recognition among institutional investors for its quality research, having ranked No. 1 team in Greece at the Extel Surveys of 2013-2016 and 2018. We have also been named Leading Brokerage Firm in Greece over 2014-2016 and in 2018.
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