PPC provided aggressive/ambitious 2024-2026 financial targets, with 2026 EBITDA at E2.3bn (from E1.5bn pro forma in 2023), implying +15% p.a. But not that different to the previous strategy update (2021). The main difference being Enel Romania, adding E500m p.a. or 22% of group EBITDA. Greece implied EBITDA of 1.8bn in 2026 is a bit higher than previous guidance for E1.74bn. In 2030 PPC expects EBITDA will rise to E3.0bn.

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…

What’s new? Q1 2023 showed EBITDA growing +67% yoy at E285m, and -8% down qoq; 2/3 came from generation & supply and the rest mainly from distribution. Management raised FY organic EBITDA guidance to E1.2bn (from E1.1bn). PPC is emerging strong from the energy crisis, delivering on its RES business plan, including in SEE (Romania), and on track to reinstating dividend payments out of 2023 earnings.

What’s new? EBITDA in Q4 came in +37% better than guidance (and consensus) but -16% below our estimates. We single out a) the huge cash flow improvement in Q4, with net debt landing to E1.5bn from E2.5bn in Q3; b) RES progressing as per the business plan; and c) guidance for higher EBITDA in 2023 at E1.1bn (2022 at E0.95bn), excluding the Enel Romania acquisition (E300m).

What’s new? Following three months of exclusive negotiations, and in line with its 2021 strategy, PPC announced the acquisition of Enel Romania assets, namely 499MW installed wind + 36MW solar (plus 5GW pipeline o/w 314MW short term additions), three DSOs, and two electricity supply companies, for a total enterprise value of E1.9bn (incl. minorities) or an equity value of E1.26bn. PPC buys these assets at an implied 6x run-rate EBITDA, which we consider to be quite favorable. The transaction is expected to close by Q3.
Conclusion. We like the transaction because a) it was completed at a 50% discount to recent RES deals in Greece, namely MOH’s E2.0m/MW or 12x EBITDA acquisition of Ellaktor wind assets; and b) it is evidence PPC is delivering on its business plan targets as laid out in 2021.

RG_PPC_Buys Enel Assets in Romania_Mar2023