Fintel Energija: The calm before the storm (stays BUY)
We reiterate our BUY recommendation on Fintel Energija with a new price target (PT) of RSD 814/share (from RSD 803), implying 31% upside. This year, Fintel’s wind portfolio is running at full speed, leading to much higher EBITDA and a significantly stronger balance sheet. The company stands ready for more capacity to be added from its c.1.5GW solar and wind pipeline. By now, we had expected the RES auction to be announced. Serbia’s Regulator has announced a price cap for the auctions, however, which we do not believe is attractive for any private player. With elections close, an energy crisis raging in the country and a likely adjustment of the price cap, there could be some delay to new RES additions, in our view. Fintel is already working on a plan to bank its projects via PPA, starting with a new 68MW of wind at Kosava. We would prefer this solution, as we believe power prices in Serbia should trade at significantly higher levels vs. the EU average in the long term, and RES looks like the only solution to the current lignite-heavy exposure. Fintel now trades at significant discounts vs. its peers. Some of this might be explained by the very low liquidity of the stock but, considering our DCF, which reflects Fintel’s equity story better, we are confident in our rating.
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