Axia: Launches target price for Mytilineos – rally can exceed 70%

Her Eleftherias Kourtali

Axia Research raises the target price for the share of Mytilineos to 23.10 euros, from 15.70 euros before, giving a buy recommendation and thus seeing a jump of 53% from the current levels. In fact, as he emphasizes, there is a possibility that its price will increase up to 26.10-27.10 euros with a rally of more than 70%, if the course and the size of the company prove to be even stronger than expected.

More analytically, as he points out, the investment story of Mytilineos is based on the strategic position of the group in order to take advantage of the global trends of the energy transition, offering significant growth with a very attractive risk / reward profile. The aluminum part of the listed company is already taking advantage of the support environment in LME along with its competitive cost base (the newly signed 3-year fixed price contract provides “immunity” to recent increases in electricity prices).

At the same time, Greece’s energy transition seems to be creating a scenario of tightening electricity markets and accelerating the growth of RES capacity, at a time when Mytlineos is launching the new CCGT station and expanding aggressively on RES.

Finally, after a transitional period, the group divisions related to EPC (energy projects), RSD (renewable energy development & energy storage) and SES (sustainable development projects) are at a turning point with a number of projects and initiatives to reach the implementation phase and enhance profitability.

In this context, Axia points out, Mytilineos is going to significantly increase its profitability and viability from 2022-2023 onwards. Therefore, it is expected that the group EBITDA will increase over 500 million euros (compared to 310 million euros average 2017-21) and net income over 300 million euros (compared to 150 million euros on average 2017 -21).

On the market side, as Axia expected, Mytilineos’s share price has built a dynamic thanks – among other things – to the recovery of economic activity, and has rallied close to 30% in the first half of the year reaching levels of the target price it gave, of 15.70 euros, and since then it has been moving around these levels.

Taking into account the management’s moves to ensure the profitability of the metallurgy, the improved outlook on the prospects of the local electricity market and the recovery of EPC activity, Axia is proceeding to revise its estimates.

In this context, it now argues that Mytilineos in the future will increasingly attract the attention of investors not only because of a stable profit potential (due to its exposure to the aluminum market) but also because of the implementation of the group strategy to create value. which will benefit from the mega-voltage of the energy transition.

So Axia updates its estimates to take into account the latest profitability trends (continued strong LME outlook, recovery of EPC activity) and raises the forecast horizon at the end of 2022. The target price resulting from Axia calculations is the 23.10 euros, ie a rally of 53% in relation to the current levels.

As he notes, there are chances for an even stronger rally, based on the results of Mytilineos in its various activities, which if realized will add another 3-4 euros to the estimated valuation of the stock, thus bringing the target price to 26.10-27 , 10 euros and a possible upward movement of more than 70%.