Green Energy Emperor

By Apostolos Manthos

The European strengthening of environmental sensitivity about the devastating consequences of fossil fuel consumption in the ever-increasing worsening of global climate change, as well as the immediate need for strengthening after the energy crisis, the prospects for energy independence create an incredible chronological development of renewables (RES). The priority that will be given by investments of tens of billions of euros in green energy until 2030 contains a lot of impetus that could cause a huge explosion in the development and profitability of the renewable energy sector.

The undisputed favorite of any investor, institutional or not, who wants to participate in this dizzying period of development that is set for the next seven years, is none other than the “emperor” of the sector itself, TERNA Energy Group (TENERG), which also has the power to Grab this lucrative giant of green energy to the fullest.

A large group that has set as an initial goal the establishment of a group of renewable energy projects with a total capacity of 3.3 gigawatts by 2025 and 6.4 gigawatts by 2029, and a strategic investment program that will reach 5.5 billion euros and will be able to achieve annual revenues of more than 1.25 billion euros and EBITDA more than 700 million euros.

At the midpoint of the programme, TERNA Energy will bring shareholders an EBITDA of over €400 million, which if we parallel that directly to the 12 times the EBITDA that occurred upon the acquisition of Anemos Holdings of Ellaktora by Motor Oil Renewable Energy, we price the group’s total acquisition at €4.8 billion, or twice its listed value.

So it’s good not to get too hung up on the emerging deal with First Sentier for €22-24 or up to €2.8 billion of total supply, completely forgetting the group’s huge profit potential for the coming years which will further value it as a higher ‘bride’.

By the way, information about the aforementioned deal indicates that the banking portion of the financial backing has closed and discussions are still in the… last mile.

After all, traditionally on big acquisitions, 90% is easy to walk while the remaining 10%, which also contains the last details to discuss before signing autographs, has a bit of a dirt road.

Also in terms of reputation, because that’s what it’s about, TERNA Energy exiting MSCI Greece Standard, all I have to deposit is Gandhi’s saying… “A mistake does not become a truth because it is so widespread, nor a truth becomes a mistake, because no one sees it “.

Of course, the group does not stop at all this, as it continues to increase its installed capacity at RES, now exceeding the 1.2 GW limit for projects in operation from the 905 MW that was at the end of 2022, while by the end of 2023 there is a possibility to increase it to 2 GW, which would It means that the current year pulls in another increase in profitability that will lead to significantly higher valuations of the stake value of TERNA Energy.

Only if we put the entrance in 2023 to the largest wind farm in Greece, in Caferia Evia, with a total capacity of 330 MW, where almost 90% of the total capacity of the project has been built, with completion expected by the end of September, the operating profitability of the group for the year will jump 2023 to +40% compared to 2022.

At the same time, some of the projects currently in operation, with the exception of Evia, are the 246.4 MW massive PV project in Evros, the 222.3 MW PV projects in Thessaly region, while there are at least three agreements for 50 MW PV projects in the pipeline. projects in the Arta region, 230 MW wind farms in Etoloakarnania as well as 140 MW photovoltaic power plants in Bulgaria.

Also, in the past few months, the country’s largest storage project has been started which will not only upgrade the local power generation system, but also the energy mix in Greece, contributing decisively to stability for the safe and efficient transmission and distribution of electricity, lowering prices in the electricity market, as well as Greece’s independence from imported fossil fuels.

We are talking about TERNA Energy’s flagship investment of €646.3 million, the main pumped storage project in Amfilochia with a total capacity of 680 MW (production) and 730 MW (pumping) and an estimated annual clean energy production of 816 GWh.

However, apart from this important energy storage project, the group is also promoting the hybrid project in Amari, Crete, while launching corresponding pumped storage projects in Veria and the Peloponnese, after obtaining permits with a total installed capacity of 1.5 GW.

It should be noted here that the entry of TERNA Energy as a leading company in these new project areas will guarantee it higher returns at the best prices that it will receive in the “green” bilateral contracts compared to … the second.

With such rapid growth in one of the “hottest” industries worldwide, the extreme lag the stock is experiencing in relation to the market is inconsequential, with the general index registering +40% YTD and TERNA Energy a -13% – which does not Doubt it is a serious discount that is expected to ease by the end of the year, which logically gives a low risk entry to invest at these price levels.

Graphically, the stock has now unjustifiably reached the very strong support area from 17.80 to 17.50 EUR. An area that has recently been a very good buy area as strong buyers emerge at these price levels. Of particular interest is the entry of the stock price into the 55-week medium-term slow Fibo Keltner channel. From the statistical behavior of the stock so far, every time it touches the mentioned chart indicator, it gives great buying opportunities. Three times it has done this in the last two years and three times the stock has reacted strongly upward, giving in fall 2021 a +26.5%, in spring 2022 a +62% and in winter 2022 a +40%. now;

However, the National Stock Exchange in 2022, which sees in the analysis only a part of the projects that are now in operation, under construction or ready for construction, has given a target price of 25 euros. With the new data, the target price will have risen, giving a large margin for the rise from yesterday’s session low to 17.60 EUR. Even the price of the takeover if we take the margin increase is in the range of + 36% (!).

Also, the very important volume of 37 million shares achieved within the range of fluctuations in the last 266 days between 21.34 and 17.50 euros will not allow the stock to continue its short-term downward trajectory. Graphically, the scenario that gathers the highest realization probability is the 266-day Vwap bullish re-approach to €19.88.

* Apostolos Manthos is responsible for technical analysis and investment strategy