Ignitis Group: green gold (stays BUY)
We reiterate our BUY rating on Ignitis Group (Ignitis), with a new 12M price target (PT) of EUR 31.1/share, implying 53% upside. We believe that Ignitis is still undervalued and unfairly overlooked by investors. It offers: 1) a credible plan for 1-1.2GW of new RES additions until 2026E and 3-4GW of additions by 2030E, vs. the current 1.2GW; 2) EBITDA outperforming peers over the next three years, despite our falling power pricing assumptions; 3) generous dividend distributions, despite the heavy capex ahead (an average yield of 6.5% for 2023-25E), with potential to start paying even higher dividends in the coming years, as it keeps beating its financial forecasts and is willing to go up to 5x net debt/adj. EBITDA. Ignitis is trading at our 2023-25E EV/EBITDAs of 5.2-6.3x and P/Es of 6.5-7.0x, at 23% and 47% discounts, respectively, vs. its peers. We also believe that the market has not yet priced in the full potential of the Green Generation segment. Ignitis remains one of our top picks in the utilities space, both in terms of valuation upside and thanks to its attractive business model.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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