Wood & Co increases the price target for GEK ΤΕRΝΑ to €27 per share (from €18), implying a 48% upside from the current levels. As the brokerage firm points out, in 2024 GEK TERNA’s profitability profile became more “aggressive”, with the sale of TERNA ENERGY and the Group’s even more dynamic entry into concessions with the signing of two emblematic contracts: Attiki Odos and Egnatia Odos. This strategy is expected to lead to an increase in EBITDA and net profits with a CAGR of 14% and 11% respectively, for the period 2024-2028.
Concessions are expected to take centre stage for the Group and lead the charge generating more than €0.6bn in EBITDA in 2028, compared to €0.2bn in 2024, accounting for over 70% of the Group’s total.
At the same time, the construction sector is expected to remain the bedrock for the Group, courtesy of a larger than €5bn backlog at present and Greece’s favorable macro backdrop. Specifically, the estimated GDP growth of 2% in the coming years and the resources of the Recovery and Resilience Facility (RRF) reinforce the positive prospects of the infrastructure sector.
According to Wood, following the sale of GEK TERNA’s stake in TERNA ENERGY for €0.9bn, GEK TERNA has built up ample financial headroom to fund its expansion into concessions and secure new construction projects.
Wood estimates that net profits will amount to €141ml in 2024 and €146ml in 2025, while they are expected to exceed €200ml in 2028. It places EBITDA at €423ml and €596ml for the years 2024 and 2025 respectively and at over €800ml for 2028.
Regarding the valuation of GEK TERNA Group (based on the sum-of-the-parts methodology), concessions represent more than half of the total value (€1.5bn), followed by the construction sector (€0.7bn) and power generation and supply (€0.59bn). The total valuation amounts to €2.8bn or €27/share (after applying a 15% discount) implying an upside of 48% from current levels.
