Poised to hit targets
With the announcement of its Q1 sales figures, Albioma (PARIS:ABIO) has reiterated its targets for 2014 at the EBITDA and net profit level and expects its recently acquired Brazilian assets to contribute to profitability for the rest of the year. We have updated our forecasts following the publication of its report and accounts for 2013 and calculate an average of our valuation analysis of €22/share.
Q1 sales
Due to the cost pass-through mechanism inherent in the long-term power purchase agreements of the thermal power plants, sales figures do not necessarily provide a good guide to profitability. With this caveat, Albioma achieved an availability rate of 91.8% for its thermal plants in Q1 (92.3% FY13) while sales declined by €10.7m vs Q113, from €90.9m to €80.2m. The major factors leading to the fall were a return to a normalised call-out rate (11.9% versus 28.9% in Q113) for the Galion plant on Martinique (-€5.5m) and a rescheduling of the yearly service for the Bois-Rouge plant on La Réunion (-€4.3m). The fall in the coal price also reduced revenue by €2.1m, although as a pass-through cost this has no impact on margins. The contribution from the solar business remained broadly unchanged at €9.6m.
Outlook – Albioma reiterates its 2014 targets
Albioma has confirmed that it expects a consolidated EBITDA for FY14 of €123-126m and €33-35m net profit. We have updated our financial forecasts post the publication of the 2013 report and accounts and the Q1 sales figures. Our revised forecasts of EBITDA €125.6m and net profit of €35.6m now reflect inclusion of the Brazilian acquisition for the first time (€6m of revenue 70% EBITDA margin), slightly lower expected availability for Galion and the impact of the lower level of indebtedness achieved at year end 2013 (€419m vs our expectation of €493m) thanks to a combination of lower and deferred capex. We expect gearing to rise as Albioma implements its capex plan of €1bn for the period 2013-23.
Valuation: Average of valuation of c €22/share
Our peer group analysis, using a range of market multiples, produces a valuation for Albioma ranging from €16 per share based on yield, to c €30 per share using a P/E approach. We have updated our long-term DCF valuation (30 years) for Albioma to reflect our new forecasts. The overall DCF indicates a valuation for Albioma of just under €24/share, and when added to the peer group analysis, provides an average valuation of c €22/share.
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