Original-Research: MPCES Energy Solutions N.V. (von NuWays AG): Buy

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Original-Research: MPCES Energy Solutions N.V. - from NuWays AG

01.11.2024 / 09:01 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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The issuer is solely responsible for the content of this research. The

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invitation to conclude certain stock exchange transactions.

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Classification of NuWays AG to MPCES Energy Solutions N.V.

Company Name: MPCES Energy Solutions N.V.

ISIN: NL0015268814

Reason for the research: Update

Recommendation: Buy

from: 01.11.2024

Target price: NOK 20.00

Target price on sight of: 12 months

Last rating change:

Analyst: Christian Sandherr

Strong op. progress, impairments weighing on consolidated P&L; chg. est.

Q3 proportionate sales increased by some 29% yoy to $ 3.6m as the group's

energy output increased to 30.7 GWh driven by the ramp up of the company's

production portfolio but also higher energy prices at its El Salvador sites.

As a result, the proportionate EBITDA strongly increased to $ 2.6m, a 72%

margin (+126% yoy). Thanks to the group's tight cost control (-30% overhead

costs yoy), the consolidated EBITDA turned positive at $ 1.4m.

While the 9M consolidated EBIT figure was still negative at $ 1.4m, this was

mainly due to impairments to the tune of $ 1.35m. This should provide

investors with confidence that the consolidated EBIT is seen to turn

positive in FY25e, also partially carried by the San patricio project

turning operational.

Furter portfolio adjustments looming. As already visible during Q2, MPCES'

CHP plant in Puerto Rico was not producing any electricity in Q3 due to the

absence of demand from the offtaker, which is undergoing a long-term

restructuring of its manufacturing site and business. As a result, MPCES has

impaired some $ 0.8m of the project's book value and has put the project up

for sale. Taking into account the offtaker's financial situation, we would

expect the sales to take place at a notable discount (~ 50%) to the

remaining book value of $ 8.3m. We expect the sale to be signed at the end

of Q1/early Q1.

Further, MPCES decided to discontinue three development projects due to a

low likelihood of ultimately running them at internally required IRRs. While

the company has recorded impairments for two projects (Acacia and

Matarredonda), we expect the company to be able to sell the third one

(Pacande) at or above the book value of roughly $ 0.8m, eNuW.

Liquidity no reason for concern. While the free cash (excl. cash in project

companies and cash deposited as collateral to secure project-related bank

guarantees) stood at only $ 1.6m at the end of Oct., this figure should

strongly increased towards the end of the year (eNuW + $4-4.5m) due to the

imminent sale of the CHP plant and the Pacande development project. On top,

MPCES is still pursuing farm downs of several project, which are currently

running inefficient funding structures (i.e. 100% equity).

Guatemala project progressing as planned. The construction of its 65MW PV

project, which begun at the end of February, is progressing as planned and

reached 50% completion. Installation of modules shoud begin shortly. While

MPCES has not yet signed a co-investor (49% stake of the project), we expect

this to happen until the end of this year, which was also confirmed by

management during the earnings call. 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 ratin with a new NOK 20 PT (old: NOK 23) based on 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/31155.pdf

For additional information visit our website: www.nuways-ag.com/research

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

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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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2020519 01.11.2024 CET/CEST

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