Stay on this road
We remain bullish on GEK Terna despite the YTD re-rating and we see significant long-term value for shareholders. In our view, GEK Terna is a defensive play on Greek infrastructure but with strong growth in EBITDA from existing concessions, room to expand further into new projects and a large backlog in the construction space. We have, therefore, upgraded our Price Target (PT) to EUR 54.0/share from EUR 34.0/share previously. Valuation is, in our view, appealing trading on 8.8x EV/EBITDA on 2028E. Model update. We have increased our adjusted EBITDA forecasts by 5% in 2027E and 12% in 2028E. The upgrade is mainly driven by 1/ Egnatia Odos and the incorporation in 2028E of higher tolls and better traffic following partial completion of the cap ex plan; 2/ higher construction revenue driven by a strong backlog (EUR 9.1bn), implying an EBITDA of c.EUR 190m per year in our forecast period (vs. c.EUR 180m average EBITDA in our previous forecasts); and 3/ the inclusion of the 162MW Battery Energy Storage Systems (BESS) projects in Greece, operational towards year end 2026E.
Valuation. We value GEK Terna with a Sum of the Parts valuation and a PT of EUR 54.0/share from EUR 34.0/share previously. The increase in our PT is mainly due to the more bullish assumptions on Egnatia Odos post consolidation, lower cost of equity in concessions and higher forecasts in the construction space. Our PT implies a reasonable 2026E EV/EBITDA of 6.2x for the construction space, a blended 2026E EV/EBITDA of 7.7x on Conventional Energy and an EV/EBITDA of c.11x on 2028E for operating concessions.