ADMIE Holding is a holding company that owns a 51% stake in IPTO, a Greek regulated utility. IPTO owns, manages and operates the Greek electricity transmission grid. The network includes 11,801km of high voltage lines. The company plans a c €4bn investment plan over the period 2019–27.
ADMIE Holding offers exposure to growth in the Greek electricity transmission grid IPTO. IPTO’s underleveraged balance sheet (0.9x adj net debt/EBITDA at the end of 2018) sustains a c €4bn investment plan, which we estimate will result in a regulated asset base (RAB) CAGR of 11% in 2018–27. ADMIE Holding started FY19 with a strong Q1 (IPTO’s EBITDA +19% y-o-y). We recently increased FY20e DPS by 12% and made small changes to earnings forecasts (FY19e adj net income +5%). Despite the recent share price appreciation, the stock still trades at a large discount to both European regulated utilities and the implied equity regulated asset base (RAB).
IPTO has launched large projects for the interconnection of the Greek islands, to reduce costs for consumers, improve security of supply and environmental sustainability. Most Greek islands rely on expensive and polluting fuel-oil-fired plants (often close to tourist areas); currently the extra costs of running these plants is shared among all Greek consumers (4–12% of a retail consumer’s bill). The construction of interconnections should allow for the replacement of these plants with renewables and imports from the mainland, lowering both costs for consumers and carbon emissions.