GREENALIA: A DIVERSIFIED IPP WITH HIGH-QUALITY ASSETS (ANÁLISIS BANCO SABADELL)
A well-diversified renewable energy producer with high-quality assets. We initiate coverage with a BUY recommendation and a T.P. of € 20.80/sh. (+54% upside).GRN is a vertically integrated and multi-technology IPP (Independent Power Producer), with a good track record. The company has a secured backlog of 1,104 MW located in Spain and the US (vs. current capacity of 125 MW). One of GRN’s main comparative advantages is the quality of its assets (recurring revenues with a high EBITDA conversion ratio), which will allow it to obtain high non-recourse financing (~70% of debt) to execute its expansion plan through 2024e (8.8x the capacity installed in 2021 and a CAGR’21-25e of +31% in EBITDA). We believe that the challenges faced by the sector are manageable and, to some extent, already priced in. The stock is trading at 16.6x EV/EBITDA’22e vs. 13.3x for the sector.
Greenalia SA is a Spain-based holding company (the Group) active in the forestry and energy sectors. It specializes in the purchase and sale, import, export, manufacture and general processing of all types of wood, as well as its transport. The Group develops its activities in five business lines: Electric power, Thermal energy, Industrial, Logistics and Forestry. Its Electric power activities are concentrated on renewable technologies, utilizing biomass and wind power. Thermal energy activities include thermal power production (heating and cooling) using biofuels (pellets and dry woodchips), which are produced by the Industrial division. The Logistics division covers the Group's logistic and export needs, including storage, stowage, transportation, customs and shipping agency, as well as delivers services to third parties. The Group's Forestry activities include forest mensuration and assessment, certification, logging and transport, as well as commercialization of forest products.
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