Focusing on the big picture usually means we are not able to assess the small one, i.e. short/mid term financials. Indeed, this is the case with the grid operator (51% owned by listed ADMIE Holdings). RAB of E2.6bn in 2024, increases to E3.5bn by 2026 with Ariadne (Athens-Crete) and Cyclades D and to E6.2bn by 2031, with the rest of the Greek islands and Italy (net of subsidies and deprecation). We do not include Cyprus, S. Arabia or Egypt.

This is our BoP Greek equities briefing. We have not made many changes compared to our semi-annual one in July: we downgraded Alpha and Helex; and upgraded Eurobank. Plus, we re-visited GEK, reiterating OI and replacing its soon-to-be-delisted RES subsidiary, Terna Energy.

The grid operator (51% owned by listed ADMIE Holdings) reported another strong set of results with Q3  revenues/EBITDA/net income at E131m/E95m/E46m up by +28%/+26%/+38% yoy. Driven by electricity demand (+5% yoy), higher TUoS charges (+10%) and interconnection (+61% yoy).

Major projects capex (Cyclades D, Crete) remains on track. While on the Cyprus interconnection there has been more news flow (and confusion) than capex since Q2

The Greek TSO (51% owned by listed ADMIE Holdings) reported strong Q2 results reflecting higher electricity demand, and much higher interconnection revenues. Revenues/EBITDA/net income grew by +22%/+24%/+30% yoy. Capex at E143m from E127m in Q1. Operating cash flow and subsidies pushed net debt E60m lower qoq at E837m (2.5x annual.)…

What’s new? ADMIE Holdings shares are re-rating (+41% YTD vs +44% for the Athens Index) on higher WACC/RoRAB expectations for IPTO, its 51% sole investment. And rightly so. If the regulator increases IPTO’s 2023-2025 RoRAB (WACC) by +100bps to 7.1%, ADMIE Holdings dividend yield rises to 6.6%. But not sooner than 2025, when total RAB rises to a meaningful E3.2bn (from E2.0bn in 2022). And assuming the PMI additional return remains unchanged at +1.0%.
In this note, we are addressing the following dividend-yield-buffer questions: a) how likely is RAE will approve a higher WACC for IPTO? b) if so, what about RAB evolution? c) what is the impact on the fair value of ADMIE Holdings? d) what should investors do with the stock?