EUR 300.00 For Business Accounts Only

TERNA ENERGY | Peak capacity target within reach

Against a more conducive backdrop in terms of licensing – and working capital dynamics, at least until recently – and in view of Greece’s ambitious de-lignitisation program, the need for higher RES penetration in the overall energy mix increases. Being the leader in terms of RES market share (20% in total RES), Terna Energy is well-positioned to take up a significant part of needed capacity additions in the coming years (pipeline accounts for c. 23% of 2.4 GW total capacity with installation license in Greece). As such, we have revisited our model to reflect an updated capacity expansion program, which includes additional installations in Greece from 2021 onwards, inputting 18% CAGR in Terna Energy’s capacity through to 2021. The higher capacity deployed translates into 23% EBITDA CAGR over 2019-2022e on our estimates.

Our new capacity targets lead to a c13% upgrade in Energy Sales & EBITDA from 2022e onwards. Our new estimates result in a €10.50 TP, implying a c. 30% total return (including cash distributions). Our methodology effectively values Terna Energy at a c. 11.3x 2020e target EV/EBITDA. At our new target price, Terna Energy would trade at a slight premium to European RES Generators on 2020e EV/EBITDA multiples, which is justified in our view, given the group’s balanced portfolio of Greek and US capacity and enhanced growth profile compared to a more mature European RES sector.