We are revising our forecasts for Cenergy following management’s decision to double the originally planned production capacity of its onshore cable plant in Maryland, a report by Eurobank Equities says.
We are now modelling annual nameplate capacity of around 100 ktpa, up from approximately 50 ktpa previously, with Phase I due to begin production in the second half of 2027 and the additional capacity from Phase II expected to come on stream in fiscal year 2028.
Accordingly, the analysts write, we are incorporating slightly higher EBITDA margins for the Maryland plant, although our assumptions remain in the low double digits.
As production approaches full capacity, we estimate that the expanded plant could contribute annual EBITDA of more than $60 million, compared with our previous estimate of $25-30 million under the original investment plan. Fiscal year 2029 will be the first full year of contribution from both phases.
We are also revising our capacity assumptions for the plants in Thebes and Eleonas to around 65 ktpa and 60 ktpa, respectively, up from our previous estimates of 45-50 ktpa for each, while maintaining our strong assumptions for capacity utilisation and margins at both plants.
These adjustments, together with the Maryland expansion and a modest improvement in US profitability, lead us to raise our estimates for Group adjusted EBITDA by 3% in 2027 and 5% in 2028, while our net profit forecasts increase by 2% and 4%, respectively.
We are raising our forecasts for capital expenditure (capex) to €319 million in 2026 and €174 million in 2027, reflecting the higher cost of Phase I in Maryland, the additional investment of around €50-60 million for Phase II, and further spending in Eleonas and Hartlepool.
Notably, management confirmed that it expects to fund the Maryland expansion entirely from the Group’s existing resources. As investment declines from peak levels, the Group’s free cash flow (FCF) is expected to recover to €146 million in 2027e and €238 million in 2028.
Net debt is expected to peak at around 1x EBITDA in 2026, in line with management guidance, before gradually falling to almost zero by 2029.
The brokerage raises its 12-month target price from €25.3 to €29.5, implying an EV/EBITDA multiple of around 11.7x for 2028. The recommendation is Buy.