Ellomay Capital Ltd (NYSE:ELLO) is a renewable power asset owner, operator and developer. Currently, most of its operating cash flows come from 30.5MW of solar power plants in Italy and Spain (at a cash yield of 10% pa). A 9.375% stake in the gas-fired Dorad Power Plant in Israel also contributes to EBIT. The company has just completed the acquisition of a 9MW solar plant in Israel in October 2017. In 2018, management seeks to generate additional revenue streams with the completion of two waste-to-energy plants in the Netherlands. Our updated fair value per share of $11.3 takes into account existing and new revenue streams, a higher level of leverage required to fund its growth and a 20% discount due to the limited free float.
Solar in Israel and waste-to-energy in the Netherlands as new revenue sources from 2018
Ellomay is currently focusing on reinvesting capital in asset growth. Management has just completed (October 2017) the acquisition of an operating 9MW photovoltaic plant in Talmei Yosef, Israel (which generates revenues of $4.5m pa). Ellomay is also aiming to complete the construction of two waste-to-energy plants in the Netherlands to generate annual revenue of €6.9m. These projects will be accretive to Ellomay’s bottom line. We have increased our 2018 revenue estimate by 55% y-o-y to reflect these new revenue streams (vs. the previous estimate).
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