Polenergia S.A. (PEP.WA) | Investment Case

1. Company Snapshot

1.a. Company Description

Polenergia S.A., together with its subsidiaries, generates, distributes, and trades in electricity in Poland.The company operates through Onshore Wind Farms, Photovoltaics, Offshore Wind Farms, Gas and Clean Fuels, Trading and Sales, and Distribution segments.The Onshore Wind Farms segment engages in the development, construction, and maintenance of facilities generating electrical energy from onshore wind.

The Photovoltaics segment develops, constructs, and maintains facilities generating electrical energy using the solar radiation.The Offshore Wind Farms segment develops, constructs, and maintains facilities generating electrical energy from wind at sea.The Gas and Clean Fuels segment is involved in the development, construction, and maintenance of facilities generating electrical energy in gas cogeneration; and development work in the manufacture of hydrogen and generation of energy from hydrogen based on the renewable sources originating energy.

The Trading and Sales segment trades in electricity, and certificates of origin, and other energy market instruments; sells electricity to industrial customers; and provides market access services to energy producers using renewable energy sources.The Distribution segment offers electrical energy and gas distribution and sale services to commercial, industrial, and household customers, as well as e-mobility solutions.The company was formerly known as Polish Energy Partners Spolka Akcyjna.

Polenergia S.A. was founded in 1997 and is based in Warsaw, Poland.

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1.b. Last Insights on PEP

Polenergia S.A.'s recent performance was negatively impacted by the challenging European market landscape, characterized by mixed economic indicators and geopolitical uncertainties. The company's operations are likely vulnerable to the impending U.S. tariffs, which could exacerbate existing headwinds. Furthermore, the recent easing of tariff concerns has not yet translated into a significant boost for the company, suggesting that it may take time for Polenergia to fully capitalize on the improved economic conditions.

1.c. Company Highlights

Last Price	56.4
Change Percentage	-1.74%
Open	57.4
Previous Close	57.4
Market Cap ( Millions)	4355
Volume	2234
Year High	74.6
Year Low	52.6
M A 50	58.61
M A 200	62.48

FCF Yield	7.97%
Dividend Yield	0.00%
ROE	0.96%
Debt / Equity	74.87%
Net Debt / EBIDTA	516.87%
Price To Book	1.03
Price Earnings Ratio	105.8
Price To FCF	12.55
Price To sales	0.96
EV / EBITDA	14.52

2. Transcript Summary

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3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.85%)

6. Segments

Trading and Sales

Expected Growth: 8.37%

Polenergia S.A.'s Trading and Sales segment growth of 8.37% is driven by increasing electricity demand, effective hedging strategies, and a favorable regulatory environment. Additionally, the company's focus on renewable energy sources, such as wind and solar power, has contributed to the growth. Furthermore, strategic partnerships and acquisitions have expanded the company's customer base and improved operational efficiency.

RES Generation - Onshore Wind Farms

Expected Growth: 8.23%

Polenergia S.A.'s onshore wind farms RES generation growth of 8.23% is driven by increasing demand for renewable energy, declining wind turbine costs, and supportive government policies. Additionally, Poland's goal to reduce greenhouse gas emissions and meet EU renewable energy targets contributes to the growth. Furthermore, advancements in technology and improved efficiency of wind farms also play a significant role.

Distribution and eMobility

Expected Growth: 21.27%

Polenergia S.A.'s Distribution and eMobility segment growth of 21.27% is driven by increasing adoption of electric vehicles, government incentives for sustainable energy, and strategic investments in charging infrastructure. Additionally, growing demand for clean energy and decreasing battery costs contribute to the segment's rapid expansion.

Gas and Clean Fuels

Expected Growth: 10.8%

Polenergia S.A.'s 10.8% growth in Gas and Clean Fuels is driven by increasing demand for low-carbon energy sources, government incentives for renewable energy, and strategic partnerships to expand its clean energy portfolio. Additionally, the company's focus on diversifying its energy mix and investing in innovative clean fuel technologies has contributed to its growth momentum.

Unallocated

Expected Growth: 7.43%

Polenergia S.A.'s unallocated segment growth of 7.43% is driven by increasing demand for renewable energy, strategic investments in wind and solar power, and effective cost management. Additionally, Poland's energy transition policies and EU's climate goals support the growth. Furthermore, the company's diversified revenue streams and strong operational efficiency also contribute to this growth.

RES Generation - Photovoltaics

Expected Growth: 10.27%

Polenergia S.A.'s RES Generation - Photovoltaics segment growth of 10.27% is driven by increasing demand for renewable energy, declining solar panel costs, and supportive government policies. Additionally, Poland's goal to reach 32% of electricity from renewable sources by 2030 and the company's strategic expansion into new markets also contribute to this growth.

7. Detailed Products

Electricity

Polenergia S.A. generates and sells electricity to households, businesses, and industries through its power plants and renewable energy sources.

Heat

The company provides heat energy to municipal and industrial customers through its heat and power plants.

Renewable Energy

Polenergia S.A. develops and operates wind farms, solar parks, and biomass power plants to generate clean energy.

Energy Storage

The company offers energy storage solutions to stabilize the grid and provide backup power during outages.

Energy Trading

Polenergia S.A. trades electricity, natural gas, and other energy commodities on the wholesale market.

Energy Efficiency

The company provides energy-efficient solutions and services to reduce energy consumption and costs.

8. Polenergia S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Polenergia S.A. operates in the energy sector, which has a moderate threat of substitutes. While there are alternative energy sources, they are not yet widely adopted, and the company's products and services remain in demand.

Bargaining Power Of Customers

Polenergia S.A. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are essential for its customers, giving it an upper hand in negotiations.

Bargaining Power Of Suppliers

Polenergia S.A. relies on a few large suppliers for its raw materials, giving them some bargaining power. However, the company's size and scale of operations also give it some negotiating power.

Threat Of New Entrants

The energy sector has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to challenge Polenergia S.A.'s market position.

Intensity Of Rivalry

The energy sector is highly competitive, with many established players competing for market share. Polenergia S.A. faces intense rivalry from its competitors, which can lead to pricing pressure and reduced margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.07%
Debt Cost	5.56%
Equity Weight	71.93%
Equity Cost	5.56%
WACC	5.56%
Leverage	39.02%

11. Quality Control: Polenergia S.A. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Ascopiave

A-Score: 6.8/10

Value: 5.6

Growth: 6.1

Quality: 6.2

Yield: 8.1

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

TAURON Polska Energia

A-Score: 5.3/10

Value: 7.4

Growth: 7.1

Quality: 4.8

Yield: 0.0

Momentum: 10.0

Volatility: 2.3

1-Year Total Return ->

Zespól Elektrowni PAK

A-Score: 5.2/10

Value: 9.6

Growth: 5.0

Quality: 5.8

Yield: 0.0

Momentum: 9.5

Volatility: 1.3

1-Year Total Return ->

EnviTec Biogas

A-Score: 4.7/10

Value: 8.1

Growth: 5.2

Quality: 6.2

Yield: 6.9

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

Polenergia

A-Score: 3.7/10

Value: 4.3

Growth: 5.8

Quality: 2.5

Yield: 0.0

Momentum: 5.5

Volatility: 4.3

1-Year Total Return ->

Energiekontor

A-Score: 3.5/10

Value: 5.3

Growth: 3.2

Quality: 6.3

Yield: 1.9

Momentum: 3.0

Volatility: 1.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-4.62%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.56%

Polenergia S.A. - PLPLSEP00013

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on PEP

1.c. Company Highlights

Higher Growth

Lower Yield

Weak Momentum

Average Growth

Revenues Miss

Revenues Beats

Medium Volatility

Stable Momentum

Average Quality

Fairly Valued

Lower Quality

Expensive

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.85%)

6. Segments

Trading and Sales

Expected Growth: 8.37%

RES Generation - Onshore Wind Farms

Expected Growth: 8.23%

Distribution and eMobility

Expected Growth: 21.27%

Gas and Clean Fuels

Expected Growth: 10.8%

Unallocated

Expected Growth: 7.43%

RES Generation - Photovoltaics

Expected Growth: 10.27%

7. Detailed Products

Electricity

Heat

Renewable Energy

Energy Storage

Energy Trading

Energy Efficiency

8. Polenergia S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Polenergia S.A. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

56.4$

Current Price

56.4$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA