Last close As at 05/08/2026
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Research: Industrials
2G Energy is the third-largest provider of gas-driven combined heat power (CHP) plants in Germany. It has diversified its activities so that it is less exposed to changes in the regulatory environment for renewables and CHP in Germany through expanding export markets and service revenues. Gaspowered systems are becoming increasingly important as sources of power for supplying the difference when output from solar and wind systems is low. The stock represents a low-risk play on the shift to decentralised, decarbonised modes of power generation.
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2G Energy |
Alternative energy |
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Next-generation, smart-energy solutions
2G Energy is the third-largest provider of gas-driven combined heat power (CHP) plants in Germany. It has diversified its activities so that it is less exposed to changes in the regulatory environment for renewables and CHP in Germany through expanding export markets and service revenues. Gas-powered systems are becoming increasingly important as sources of power for supplying the difference when output from solar and wind systems is low. The stock represents a low-risk play on the shift to decentralised, decarbonised modes of power generation.
Strong growth in service revenues de-risks business
Group sales increased by 16% y-o-y during H118 to €84.1m, although the headline number was distorted by €8.4m exceptionals. Stripping this out, sales grew by 5%. Growth was driven by a strong increase in sales of biogas modules in Germany and in service revenues. Despite the surge in domestic product sales, exports constituted 46% of all CHP sales and 24% of service sales, showing that the company is becoming more resilient to changes in the regulatory environment in individual markets. It was also pleasing to note that the drive to improve monetisation of services was successful, as the development of service revenues gives additional protection from potential downturns in demand for CHP equipment and a mechanism for removing some of the seasonality in sales. Service revenues grew by 21% year-on-year to 46% of the total. EBIT, which was not distorted by the exceptional item, moved from a loss of €0.5m in H117 to a €1.1m profit in H118.
Management reiterates FY18 guidance
The combination of the positive first-half performance and the strong order book position has encouraged management to confirm the guidance for FY18 that it gave in April. This is for net sales between €180m and €210m, and an EBIT margin of 3.5–5.5%. The FY17 EBIT margin was 3.9%, so management is confident that the efficiency measures introduced in FY17 and further margin increases in the service business will result in a further improvement in this metric.
Valuation: Trading at a discount to established peers
The share price has dropped from its peak of €24.00 in July. At current levels, it is trading at a discount to the means for our sample of established boiler manufacturers on all metrics, eg the year 1 P/E is 14.6x vs 14.4x for our sample mean. This suggests potential for an uplift in valuation if management is able to raise EBIT margins to the levels shown in the consensus estimates (5.1% FY18).
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Consensus estimates
Source: 2G Energy data, Bloomberg |
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Research: Energy & Resources
Hellenic Petroleum (ELPE) demonstrated exceptionally strong margin over-performance ($7.3/bbl) versus the benchmark in Q318, with group adjusted EBITDA at €237m beating Reuters consensus by 11%. Key drivers included high availability, normalised operations and advantageous crude selection. We see several moving parts affecting benchmark margins in 2019, including highly anticipated changes to marine fuel standards (IMO 2020), crude price volatility, Iranian crude sanctions and associated waivers, as well as c 2mmbd of new global refining capacity additions. ELPE’s bias towards middle-distillate yield ensures that it is well placed to take advantage of increased demand for low sulphur shipping fuels and to remain competitive versus emerging competition. Our blended P/E, EV/EBITDA and DCF based valuation moves from €9.0/share to €8.9/share, with FY19e adjusted EBITDA reduced by 6% combined with a sector de-rating. ELPE’s forecast FY19 dividend yield (6.0%) remains supportive, with the potential for a one-off cash return on receipt of DESFA sales proceeds in Q418.