Over 2017, Ellomay Capital Ltd (NYSE:ELLO) made large investments in new projects and in acquisitions, which we expect to drive significant revenue and profit growth in 2018. Results for Q1 (normally weak due to seasonality) showed a 20% y-o-y growth in revenues and were in line with management expectations for FY18. We expect the following quarters to also show a pick-up in earnings. Looking beyond 2018, Ellomay has announced significant progress on Talasol, a large Spanish solar PV plant, which could reach financial close before the 2018 year-end. Our valuation of $11.0 per share implies c 28% potential upside.
Q1 revenues up 20% y-o-y and guidance confirmed
Q1 revenues were €3.0m, +20% y-o-y, driven mostly by new projects (Dutch biogas) and acquisition (Israel solar PV). EBITDA was €1.3m (vs €1.5m in Q117). Correcting for a €0.4m negative one-off impact, we calculate that EBITDA would have been up c 13% y-o-y. Ellomay reported a net loss of €0.4m (vs a loss of €1.7m in Q117), which we expect to turn into a FY net profit after two years of losses, thanks to the contribution of the (seasonally stronger) following quarters. We updated our estimates for results and to align the accounting treatment of Talmei Yosef project with the company’s. On an underlying basis we have reduced our FY18-20 net income forecasts by 7-9% post Q1. The company said that Q1 results were consistent with its previous forecasts for FY18 (€21.9m cash flow from the sale of electricity and gas, and total net cash flow from projects of €11.8m).
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