Fintel Energija: Growth without windfall taxes or price caps (stays BUY)

We reiterate our BUY rating on Fintel Energija with a new price target (PT) of RSD 858/share (down from RSD 868), implying 34% upside. In our July report, we highlighted that Fintel’s earnings were not being boosted by rallying power prices. With EU windfall tax discussions to exploit generators’ revenues, and also, in some countries, net profit, we now see Fintel as one of the safest picks in terms of its upside, earnings outlook and capacity growth, as we are not aware of any measures planned by the Serbian government that could hurt the company’s earnings. We maintain our pipeline targets of 68MW of capacity additions starting in 2H23E, followed by another 40MW in 2H24E, all financed with the help of PPAs. We still believe that Fintel is an undiscovered name, with its >1GW planned Serbian pipeline, and its very favourable positioning to achieve its targets over time. Fintel trades at our EV/EBITDAs of 17.4-19.8x for 2022-24E, broadly in line with its peers but, in our view, with a much lower risk of any State intervention in its business.