MYTILINEOS | RES scale-up: moving the debate to €19
Mytilineos announced a significant scale-up of its RES activities to >2 GW by 2023/2024e and c3GW in the long-term, which compares to an operating capacity of just 217 MW currently, thereby signaling significant growth ahead. On our numbers, new RES installations have scope to contribute c€80k per MW annually, adding c€180-215mn EBITDA p.a. after near-full deployment (in 2024e), thus contributing more than one third of group operating profit and leading to a step-change in the group’s EBITDA post 2023 (above the €500mν mark).Incorporating Mytilineos’s aggressive RES pipeline, and amidst positive operating dynamics in the other business units, namely a highly favourable price environment in Metallurgy (LME well above 2,000 $/Ton) and positive prospects in RSD/SES in view of the European Green Deal, we expect Group EBITDA CAGR of c12% over the next 5 years, quite an attractive growth profile among both GR non-financials and EU peers.
Recalibrating our model and moving to a SOTP-based valuation, we raise our PT to €18.70 (from €14.20 previously), effectively valuing the stock at 8.4x 2021 EV/EBITDA. Despite the > 100% rally since March 2020, Mytilineos is still trading at c7x 1-year forward EV/EBITDA (> 15% discount vs. peers). Although the current relative discount is less pronounced than the long-term average, we expect the stock to move higher in the valuation spectrum as the secular growth RES thesis plays out. We reiterate the stock as one of our top picks, given the compelling risk-reward proposition and attractive valuation.
In our note, we also present a simple framework for gauging the returns and value from each 1GW of incremental solar capacity additions (namely c€600-650m of invested capital), estimating that this is worth more than €800m in terms of EV. On its turn, this translates to an implied EV/IC ratio of 1.4x, pointing to an IRR in the high single-digits, consistent with the level of returns achieved/targeted by EU renewable companies, and a c12% addition to the market cap.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.