Mytilineos: Patience is a virtue (stays BUY)
We reiterate our positive view on Mytilineos and update our model to reflect the lower LME aluminium and alumina prices, the reduction in input costs and the higher capacity of the new CCGT plant. We now expect the company’s EBITDA in 2020E and 2021E to hover around the EUR 300m level (c.8% lower than our previous forecasts), before an uplift to EUR 381m in 2022E, due to the start of the new CCGT plant. Although we see limited short-term catalysts for the stock (capex cycle ahead, low LME prices), we view Mytilineos as an attractive long-term story, with: 1) decent valuation levels (EV/EBITDAs of c.6.5x for 2020E and 2021E, down to 5.0x in 2022E, on our estimates); 2) a credible plan for growing the business by constructing a new CCGT plant; and 3) an efficient and vertically-integrated aluminium business, with solid profitability, even in a low pricing environment. We maintain our BUY on the stock, with a new price target (PT) of EUR 12.0 (from EUR 12.5 previously).Mytilineos Holdings is an industrial group engaged in the sectors of Metallurgy, EPC, Energy, and Defence. Co. and its subsidiaries are engaged in three main operating business segments: Metallurgy, Constructions and Energy. Co. and its subsidiaries monitor its performance on Metallurgy and Mining Sector through the subsidiaries Aluminium S.A. (Alumina-Aluminium) and Sometra S.A. (Zinc-Lead). Co., through its subsidiary, METKA S.A., is an EPC Constructor in Greece.
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