Ellomay Capital is a renewable power and energy infrastructure company currently undertaking significant new development projects. 9M17 results showed significant EBITDA growth (+23% y-o-y), mostly reflecting an increase in solar production thanks to the normalisation in weather conditions. We expect 2018 to be a key year for project delivery as our revised forecasts point to very strong profit growth (EBITDA up 80% y-o-y), mainly driven by the commissioning of two new biogas projects in the Netherlands and full contribution from the solar PV acquisition in Israel. We see project delivery as the main catalyst for the stock.
Written by
Ellomay Capital |
2018 a key year for growth delivery |
Q3/9M17 results |
Alternative energy |
30 January 2018 |
Share price performance
Business description
Next events
Analysts
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Ellomay Capital is a renewable power and energy infrastructure company currently undertaking significant new development projects. 9M17 results showed significant EBITDA growth (+23% y-o-y), mostly reflecting an increase in solar production thanks to the normalisation in weather conditions. We expect 2018 to be a key year for project delivery as our revised forecasts point to very strong profit growth (EBITDA up 80% y-o-y), mainly driven by the commissioning of two new biogas projects in the Netherlands and full contribution from the solar PV acquisition in Israel. We see project delivery as the main catalyst for the stock.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
13.8 |
1.9 |
35.4 |
0.00 |
29.9 |
N/A |
12/16 |
12.9 |
(1.3) |
(13.2) |
22.5 |
N/A |
2.1 |
12/17e |
15.1 |
0.9 |
(1.2) |
0.00 |
N/A |
N/A |
12/18e |
27.4 |
6.3 |
32.8 |
9.8 |
32.3 |
0.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
2017 to show strong operating profit pick-up…
Ellomay's latest results (9M17) showed significant growth in EBITDA (+23% y-o-y), mainly reflecting the normalisation in solar PV production in Italy and Spain following unfavourable weather conditions in 2016. At the bottom line, the net loss of $3.6m was mainly the result of a one-off negative impact from revaluation of derivatives and exchange rate differences. Overall, after updating our FX assumptions (reflecting a recent move in the US$ vs €), 9M17 results and updated expectations re timing of growth projects, we forecast $10m FY17 EBITDA (company definition; +33% y-o-y) and a net loss of $3.3m. At the same time, we raise our 2017-20 EBITDA estimates by c 4-16%.
…but 2018 is the year to watch for project delivery
Our revised 2018 forecasts imply strong y-o-y profit growth due to the contribution from recent acquisitions (Israeli solar PV, consolidated from October 2017) and the commissioning of new projects (two biogas projects in the Netherlands). We forecast +80% y-o-y EBITDA growth in 2018. Beyond 2018, Ellomay has a pipeline of two large projects (a 300MW solar PV plant in Spain and a 156MW Israeli pumped-storage plant – recently reduced from 340MW by the regulator), which would represent significant profit growth opportunities in the medium term and an upside to our forecasts. Ellomay announced that it signed a PPA for the sale of electricity from the plant in Spain, which we view positively; financial closure is expected in Q2-Q318.
Valuation: Upside potential with catalysts
We have revisited our SOTP valuation to incorporate our changes in forecasts and updated FX assumptions. Our SOTP valuation of $11.4/share (NIS38.8/share) is broadly unchanged and implies > 20% upside potential to the current share price. We note the stock is trading very close to book value so discounting little ability to create value from existing and future development projects. We believe delivery on 2018 projects would provide an opportunity to crystallise the upside potential.
Exhibit 1: Financial summary
US$000s |
2015 |
2016 |
2017e |
2018e |
2019e |
2020e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
13,817 |
12,872 |
15,063 |
27,374 |
28,511 |
28,511 |
EBITDA (company definition) |
|
9,685 |
7,492 |
9,978 |
17,974 |
18,911 |
18,911 |
|
EBITDA (Edison definition, excluding associates) |
7,218 |
5,888 |
7,463 |
15,974 |
16,911 |
16,911 |
||
Operating Profit (before amort. and except.) |
2,306 |
1,004 |
2,563 |
8,774 |
9,611 |
9,611 |
||
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
21 |
99 |
15 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
5,812 |
1,807 |
(592) |
8,774 |
9,611 |
9,611 |
||
Net Interest |
(2,893) |
(3,760) |
(4,166) |
(4,506) |
(4,640) |
(4,503) |
||
Share of assocs/JVs gains/(losses) |
2,446 |
1,505 |
2,500 |
2,000 |
2,000 |
2,000 |
||
Forex gains/(losses |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
3,485 |
704 |
(3,170) |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
1,859 |
(1,251) |
897 |
6,269 |
6,971 |
7,108 |
Profit Before Tax (FRS 3) |
|
|
5,365 |
(448) |
(2,258) |
6,269 |
6,971 |
7,108 |
Tax |
1,933 |
(625) |
(1,171) |
(1,567) |
(1,743) |
(1,777) |
||
Profit After Tax (norm) |
3,792 |
(1,408) |
(124) |
3,501 |
3,894 |
3,970 |
||
Profit After Tax (FRS 3) |
7,298 |
(605) |
(3,279) |
3,501 |
3,894 |
3,970 |
||
Average Number of Shares Outstanding (m) |
10.7 |
10.7 |
10.7 |
10.7 |
10.7 |
10.7 |
||
EPS - normalised ($) |
|
|
0.354 |
(0.132) |
(0.012) |
0.328 |
0.365 |
0.372 |
EPS - normalised and fully diluted ($) |
|
0.354 |
(0.132) |
(0.012) |
0.328 |
0.365 |
0.372 |
|
EPS - (IFRS) ($) |
|
|
0.681 |
(0.057) |
(0.307) |
0.328 |
0.365 |
0.372 |
Dividend per share ($) |
0.000 |
0.225 |
0.000 |
0.098 |
0.109 |
0.112 |
||
EBITDA Margin (%) |
52.2 |
45.7 |
49.5 |
58.4 |
59.3 |
59.3 |
||
Operating Margin (before GW and except.) (%) |
16.7 |
7.8 |
17.0 |
32.1 |
33.7 |
33.7 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
126,814 |
120,628 |
152,965 |
160,765 |
160,465 |
160,165 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
0 |
||
Tangible Assets |
78,975 |
77,066 |
110,290 |
116,090 |
113,790 |
111,490 |
||
Investments |
33,970 |
30,788 |
33,288 |
35,288 |
37,288 |
39,288 |
||
Other |
13,869 |
12,774 |
9,387 |
9,387 |
9,387 |
9,387 |
||
Current Assets |
|
|
33,513 |
34,641 |
28,918 |
23,458 |
25,976 |
27,416 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
8,218 |
9,952 |
12,502 |
16,275 |
16,950 |
16,950 |
||
Cash |
18,717 |
23,650 |
9,828 |
596 |
2,438 |
3,877 |
||
Other |
6,578 |
1,039 |
6,588 |
6,588 |
6,588 |
6,588 |
||
Current Liabilities |
|
|
(10,103) |
(11,102) |
(12,499) |
(15,188) |
(17,346) |
(18,346) |
Creditors |
(4,092) |
(4,963) |
(6,360) |
(6,049) |
(6,207) |
(6,207) |
||
Short term borrowings |
(6,011) |
(6,139) |
(6,139) |
(9,139) |
(11,139) |
(12,139) |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(56,159) |
(56,302) |
(94,763) |
(90,763) |
(86,763) |
(82,763) |
Long term borrowings |
(48,117) |
(48,385) |
(83,676) |
(79,676) |
(75,676) |
(71,676) |
||
Other long term liabilities |
(8,042) |
(7,917) |
(11,087) |
(11,087) |
(11,087) |
(11,087) |
||
Net Assets |
|
|
94,065 |
87,865 |
74,621 |
78,272 |
82,332 |
86,472 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
8,056 |
11,309 |
6,326 |
11,891 |
16,393 |
16,911 |
Net Interest |
(2,904) |
(3,049) |
(4,166) |
(4,506) |
(4,640) |
(4,503) |
||
Tax |
(241) |
(54) |
(1,171) |
(1,567) |
(1,743) |
(1,777) |
||
Capex |
0 |
(5,388) |
(7,124) |
(13,000) |
(5,000) |
(5,000) |
||
Acquisitions/disposals |
0 |
0 |
(40,815) |
0 |
0 |
0 |
||
Equity financing |
0 |
0 |
0 |
0 |
0 |
0 |
||
Financing |
0 |
0 |
0 |
0 |
0 |
0 |
||
Dividends |
0 |
(2,404) |
0 |
(1,050) |
(1,168) |
(1,191) |
||
Other |
(4,485) |
4,655 |
3,387 |
0 |
0 |
0 |
||
Net Cash Flow |
426 |
5,069 |
(43,564) |
(8,233) |
3,842 |
4,440 |
||
Opening net debt/(cash) |
|
|
50,264 |
33,636 |
34,079 |
77,643 |
85,875 |
82,033 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
-461 |
5512 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
33,636 |
34,079 |
77,643 |
85,875 |
82,033 |
77,594 |
Source: Ellomay Capital, Edison Investment Research. Note: We now normalise 2017e EPS to remove the one-off $3.17m negative impact from derivative fair value adjustments.
|
|
Following shareholder approval at the December EGM, APQ has issued an additional £10.3m in 3.5% convertible unsecured loan stocks (CULS) at a 3% premium to par value. The CULS provide long-term structural gearing at a fixed cost, the proceeds of which will be deployed in line with the company’s business and investment strategy. APQ has also changed its reporting currency from sterling to US dollars so as to more closely match its investments. Separately, it has reported an unaudited 31 December net book value per share of US$128.1 and declared a fourth quarterly DPS of 1.5p. Total DPS of 6.0p declared in respect of 2017 matches the target set at IPO and takes the annual US$ NAV total return to 9.9%.