In renewables, Italy is on the podium. And with the gold medal. The American investment bank Goldman Sachs has awarded Enel Green Power defining it as the “best European green utility. However, Gs lowered the target price from 2,35 to 2,30 euro, due to the weak hydroelectric production recorded in January (-39% compared to 2011). However, the price remains 52,4% higher than the value with which it is currently traded on Piazza Affari. The EGP share, to which Goldman Sachs confirms the "buy" note, rises by 2,5% to 1,48 euros.
According to analysts, Enel Green Power has all the credentials to foresee a future of growth. The mix of technologies is very diverse (45% hydroelectric, 25% geothermal and 27% wind in 2011) and the group has extended its plants all over the world. According to a GS broker 40% of EBITDA growth will come from Latin America and Eastern Europe up to 2015 and production capacity will doubleagain in the next three years.
Another note in favor of Enel Green Power is yours weak dependence on government incentives, which represent only 30% of Ebitda in 2012, against an average of 50% in the sector. Finally, the company's investment plan is highly sustainable, neutral to free cash flows with a debt/Ebitda ratio lower than the competitors' average (3 versus 4,7)
Finally, the company's investment plan is largely "free cash flow neutral" with a debt/Ebitda ratio below the sector average, i.e. 3 times against 4,7. Based on new estimates from Goldman sachs, Enel Green will deliver a 2011-2015 EBITDA CAGR (average compound annual growth rate) of 14% and a net profit CAGR of 16%, versus 6% and 9% of the sector.
Also on Enel GS it maintains the buy rating and cuts the target price to 4,40 euros from 4,60. Enel shares on the stock exchange gain 1,13% to 3,04 euros.
