MYTILINEOS | Powering through a hailstorm
Mytilineos’ shares have shed >30% ytd, having registered a more pronounced decline than the 18% drop in global aluminium prices. In our view, despite increased volatility, the investment case remains intact by virtue of competitive production cash costs in Metallurgy and favourable operating dynamics in Power & Gas.In our new note, we reflect current trends in the metals and energy markets and adjust key input assumptions for the Metallurgy segment, incorporating lower LME prices, more conservative alumina assumptions and a more favourable €/$ rate. In EPC & RES, we assume delays in the kick-staring of new projects. Overall, we lower our sales and EBITDA estimates for 2020e by c. 18% while leaving 2021-2022 numbers largely unchanged. Following our estimates revision, we lower our PT to €10.20 but reiterate the stock as one of our top picks due to the attractive valuation (c5x 2021 EV/EBITDA), with the current price implying a medium-term LME of c. 1,500 $/Ton. Our PT places Mytilineos at 8.0x 2020e EV/EBITDA, at par with global aluminium producers.
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.
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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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