Buy
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Original-Research: MPC Energy Solutions N.V. - from NuWays AG
Classification of NuWays AG to MPC Energy Solutions N.V.
Q4 prelims paint a mixed picture; chg. est. FY24 ahead of sales guidance. MPCES ended FY24 with a strong Q4, which put the company ahead of its initial guidance, particularly driven by the plants in El Salvador and Mexico. FY24 proportionate energy output increased by 31% yoy to 116 GWh. Carried by improved electricity prices, proportionate sales rose by 42% yoy to $ 12.8m. EBITDA’s increase of 79% yoy to $ 7.9m was supported by the improved top-line but also by managements successful cost cutting efforts (overhead costs -30% yoy). Impairments weigh of results. Reported group EBIT stood at $ -13.3m as a result of $ 12.9m impairments, mainly stemming from the divestment in Puerto Rico ($ 5.1m), a correction of a JV investment value in Colombia ($ 4.5m), and a convertible note issued by a US microgrid developer ($ 1.7m). Adjusted for those, EBIT would have come in at a $ 400k loss, a significant improvement compared to previous year’s $ 4.8m loss. Colombia is an increasingly challenging market due to an alarming surge in violence as conflicts between armed groups intensify. As a result, MPCES has to hire private security personal to guarantee the protection of its staff. This significantly weighs on the profitability of its two PV plants, Los Girasoles and Planeta Rica. We hence also reflect lower margin estimates for both projects in our model. Rightsized portfolio. As previously communicated, management has further rightsized its portfolio by selling the CHP project in Puerto Rico. While the company was able to recover some $ 4m, the impairment related to the project amounts to $ 5.1m. The current production portfolio now consists out of four operational projects and one under construction (San Patricio, 65 MW PV), which should become operational at the beginning of H2. In light of the currently challenging situation in Colombia, which heavily impacts IRRs of projects, we would not only expect the company to halt new developments in that region (one project was sold) but also consider a sale of its two operational assets (39 MW). Slowed development efforts. With MPCES having notably reduced overhead costs and having sold a development projects, the company is seen to have also slowed general development efforts, ultimately reducing the pipeline. During the earnings call, the CFO mentioned an early stage pipeline of roughly 200 MW, which is in line with our previous estimates of 186 MW. Positive 2025 guidance. For FY25, management expects proportionate sales of $12-13m (eNuW: $ 14m) and proportionate EBITDA of $ 9-9.5m (eNuW: $ 9.9m). While this is below our estimates, it is important to note that the guidance does not reflect any contribution from MPCES' Colombian plants as they are up for sale (not yet excluded from eNuW). Hence, the longer the sale takes, the higher the upside to the company's FY25 guidance. Guatemala project progressing as planned. The construction of its 65MW PV project, which begun at the end of February 2024, is in its final stages. One third of the modules have already been installed. While MPCES has not yet signed a co-investor (49% stake of the project), we expect this to happen in due course. Importantly, finding a co-investor has ultimately no impact on the construction timeline as MPCES has already fully financed the project. Once the project is completed (eNuW: mid-2025), it is seen to generate annualized sales of some $8m. We confirm our BUY rating but reduce our PT to NOK 14 (old: NOK 20) based on sum-of-the-parts (SOTP) valuation, separately accounting for the value of its current IPP portfolio (NPV) and its development backlog (multiple). You can download the research here: http://www.more-ir.de/d/31899.pdf For additional information visit our website: https://www.nuways-ag.com/research-feed Contact for questions: NuWays AG - Equity Research Web: www.nuways-ag.com Email: research@nuways-ag.com LinkedIn: https://www.linkedin.com/company/nuwaysag Adresse: Mittelweg 16-17, 20148 Hamburg, Germany ++++++++++ Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte. Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse. ++++++++++
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2095423 05.03.2025 CET/CEST
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