The EUROXX stock exchange raises the bar for GEK TERNA with its new report, setting the target price at 26 euros – from the previous 20.2 euros, forecasting a 46% rise from current levels.
“The news about the sale of TERNA ENERGY and the positive outlook for the infrastructure sector further support the stock exchange’s positive view of GEK TERNA,” he says. He continues:
Up to 29%
“With the completion of existing projects, GEK TERNA will enjoy an EBITDA for 2028 of over 700 million euros, with a significant flow of dividends in the long term. Since the stock market resumed coverage in January 2024, shares have risen 29%. It currently trades at 8.5x 2028 EV/EBITDA (i.e. after fully incorporating EBITDA from large projects expected to be phased in during 2024-25E). Furthermore, the cash flow from the sale of TERNA ENERGY provides additional growth potential, given the investment power of 2 billion euros”
Development of new projects with a firepower of 2 billion euros
The proceeds from the sale of the renewables business (€880 million) will provide significant investment power for GEK TERNA’s current investment commitments (Attiki and Egnatia Roads), but also for new infrastructure projects in Greece over the next five years (€40-50 billion in total, with €8-10 billion in the next 18-24 months). GEK TERNA plans to use the cash from the transaction to accelerate the development of new projects with €2 billion of firepower for new opportunities (and/or dividend payments).
EUROXX notes that updated the model to include the TERNA ENERGY transaction as well as the positive outlook for the construction industry. EBITDA is now expected to reach guidance of EUR 0.7-0.8 billion by 2028, up from around EUR 0.4 billion in 2024, due to consolidation and maturity of new concessions. Regarding valuation, the Sum-Of-The-Parts method (taking into account a conglomerate discount of 10%) results in a target price of EUR 26/pc. with a 46% margin of advantage over current levels.