2023-08-09 22:14:37
WSP unveiled better-than-expected results in the second quarter. (Photo: 123RF)
What to do with the securities of Innergex renewable energy, Héroux-Devtek and WSP? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed.
Innergex renewable energy (INE, $12.38): a transaction that “checks all the boxes”
Innergex Renewable Energy has concluded a transaction which provides for the sale of a 30% stake in its portfolio of activities in France to Crédit Agricole Assurances for an amount of 128 million euros, or 188.4 million Canadian dollars (M$) .
Analyst Brent Stadler of Desjardins Securities says Crédit Agricole is France’s largest insurer, adding that Innergex management intends to use the proceeds to repay revolving credit facilities and finance its operations.
The transaction is expected to close in the second half of 2023. “From our perspective, the transaction ticks all the boxes. First, it demonstrates the value of the company’s ‘high quality’ wind platform,” he says. According to the analyst, the transaction values the French assets between 12.5 and 13 times the ratio of enterprise value to EBITDA (earnings before interest, taxes and amortization), while Innergex’s stock is trading at a ratio of 10 ,6 times.
Secondly, Brent Stadler estimates that the approximately 200 million dollars obtained come to remove any concern regarding the level of liquidities of the company. “The transaction is also profitable and shows the strength of Innergex’s management team,” he adds.
In his opinion, the transaction occurs when the Innergex stock is not appreciated at its fair value and might serve as a catalyst for an eventual recovery.
“The transaction values Innergex’s French operations at approximately 710 million euros, or just under C$1.05 billion. Recall that the company bought the 30% stake in September 2022 for $96.4M. The announced sale price of $188.4 million is therefore far higher, which should please shareholders,” he says.
The portfolio has 17 wind assets in operation with a total installed capacity of 324 megawatts (MW), as well as a large portfolio of assets at various stages of development. Innergex will continue to control the management of the entire value chain, from development to construction and operation.
As for the company’s second quarter financial results, Brent Stadler said EBITDA was in line with analysts’ consensus forecast of $199 million, but below his forecast of $212 million. “The company’s operations reached 91% of the long-term average electricity production,” he said, adding that US production in wind was 26% below target, which was offset by partly by a good performance in Quebec (+5%) and in France (+2%).
The analyst reiterates his buy recommendation on the stock, as well as his one-year target price of $16.50.
Héroux-Devtek (HRX, $15.68): the value of the stock remains attractive
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