New coal capacity to become
operational
The company’s lignite-fired power plant will start generating electricity in 1H15. This will reduce generation costs remarkably while increasing the flexibility of the generation portfolio providing a major base-load capacity. We expect new capacity will contribute TRY100m and TRY150m to consolidated EBITDA in 2015 and 2016.
Well diversified and cost-efficient generation portfolio
The company has a highly efficient natural gas generation capacity, utilised as base-load production to meet commitments for bilateral agreements. The company also owns highly profitable wind power plants. It actively buys from the spot market to reduce the cost base for its bilateral sales.
Focused on higher returns and debt reduction
Current weak consumption growth, high financing costs and soft electricity prices have forced the company to cut its investment plans significantly, and to focus on debt reduction.
Upgrade to BUY on recent sharp decline in price
We raise our revenue and net income estimate on the increasing profitability of bilateral agreements and decline in investment in new capacity, which does not generate sufficient economic income. Our valuation is based on a DCF methodology.
The company’s lignite-fired power plant will start generating electricity in 1H15. This will reduce generation costs remarkably while increasing the flexibility of the generation portfolio providing a major base-load capacity. We expect new capacity will contribute TRY100m and TRY150m to consolidated EBITDA in 2015 and 2016.
Well diversified and cost-efficient generation portfolio
The company has a highly efficient natural gas generation capacity, utilised as base-load production to meet commitments for bilateral agreements. The company also owns highly profitable wind power plants. It actively buys from the spot market to reduce the cost base for its bilateral sales.
Focused on higher returns and debt reduction
Current weak consumption growth, high financing costs and soft electricity prices have forced the company to cut its investment plans significantly, and to focus on debt reduction.
Upgrade to BUY on recent sharp decline in price
We raise our revenue and net income estimate on the increasing profitability of bilateral agreements and decline in investment in new capacity, which does not generate sufficient economic income. Our valuation is based on a DCF methodology.
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