October 09, 2018 - 10:34am EST by
2018 2019
Price: 1.80 EPS 0.17 0.21
Shares Out. (in M): 83 P/E 10.8x 8.8x
Market Cap (in $M): 180 P/FCF 0 0
Net Debt (in $M): 200 EBIT 0 0
TEV (in $M): 380 TEV/EBIT 7.8x (EBITDA) 6x (EBITDA)

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A mid-cap company that is not followed and trades at absolutely the wrong price. We believe this to be the cheapest wind stock globally at this point in time (and would be happy to be shown cheaper ones if anyone can point them out!), and the upside to be around 200% with the catalyst being the company being sold to a strategic or financial investor as the pipeline completes in a couple of years. The visibility and predictability of cash-flows is outstanding, and the management excellent and highly incentivised. 

Company presentation
Anemos is a pioneer in the wind renewable energy sector in Greece, and the only listed pure player in
this highly attractive market as of today. It started operating its first windfarm of 9MW in 2003, and
has been growing capacity since then to a current installed capacity of 289MW (of which 98% are
windfarms, and 2% are hydro and solar). Anemos is currently significantly scaling up its capacity by
70% over the next 18 months to reach 491MW by 2020, based on the current pipeline under
construction. We consider that Anemos’ current share price (c. EUR 1.8) significantly discounts the
strong operating performance of its current installed base and completely ignores the company’s
already secured pipeline. We have a c. EUR 5.6 target price providing a 3x return on investment, over
a 2 year period during which the company will have developed its already secured current pipeline
and will start distributing dividends. We expect the company is likely to be sold to a strategic or
financial investor at the right time fully crystallizing the valuation of the asset.
Shareholding structure
Anemos is a subsidiary of Ellaktor, the leading Greek construction and infrastructure conglomerate,
which owns 64.5% of the shares. Most importantly, the management owns a significant amount of
shares. The Chairman and CEO, Mr Sietis owns c. 2.6% shares, the COO Mr Frangoulis owns c. 1.5%
shares, and Mr Kallitsantsis, the chairman of Ellaktor and former Chairman of Anemos, owns c. 7% of
shares. The management has been working at Anemos since creation in 2001, which further
demonstrates their commitment to the business. The free float represents the remaining 24.4% of the
market cap. Due to its small free float, Anemos is thinly traded and not really covered by the sell-side.
Overview of the Greek RES market
The GreekRESsector benefits from longterm secured prices, which make it very attractive for
Until December 2013, RES operators could secure a 20-year PPA with feed in tariff. In 2014, there was
a restructuring plan launched to reduce the deficit of the market operator LAGIE. Against a 5%
reduction in the tariff, 7 additional years of operations were granted to operators on projects already
installed. This has actually been a value-accretive transformation for Anemos and for other market
participants as project durations were extended by 35% 20 years forward against a 5% reduction in
the revenues for the pre-2013 wind farms. This has been the only retroactive change in regulation.
Other changes in regulation discussed below only apply to future windfarms projects.
In 2016, the regulation for new projects changed from a feed in tariff to a feed in premium. Contrary
to what the name suggests, this still represents a secured tariff for 20 years and not a secured premium
on a volatile wholesale price.
Whilst there are always questions about the future regulatory changes, we believe that with the Greek
electricity reform having undergone already major reforms under the supervision of the Troika, and
with Greece having very ambitious targets in terms of new renewable installations, and generally
being desperate to attract foreign investment as a means to exit the crisis, the likelihood of a retro-
active cut is extremely low. Also, wholesale prices are very high in Greece (c. EUR 55 recently), so at
this stage new renewable capacities are not putting a lot of strain on the system due to very limited
subsidies required.