Public Power Corporation: shifting into high gear (stays BUY)

Using WOOD’s power macro assumption and Public Power Corporation’s (PPC) updated 2024-26E capex and RES rollout assumptions, we see the 2026E guidance of EUR 2.3bn of EBITDA and net profit before minorities of EUR 0.7-0.8bn as creditable, and reflect them in our forecasts. On this basis, we maintain our BUY rating on PPC, with an updated 12M price target (PT) of EUR 17.4/share, or 46% upside. Earnings, in the mid-term, should be supported by multiple factors, e.g.: 1) the recovery of distribution revenues, in both Greece and Romania; 2) the effective management of its domestic integrated margin, focused on maintaining strong retail margins, in a falling power price environment, and retaining customers in high priority segments; and 3) the phase out of lignite generation, with its high fixed cost base, and low or negative margins. PPC’s investment case remains predicated on the rollout of new RES capacity, with its cost and execution risk, and lower capacity than its peers for cash remuneration; regardless of its relatively healthy balance sheet, the business will only turn FCF positive from 2028E-onwards, on our forecasts.