ALBA
📈 Grupo Albanesi reported a significant 70% year-over-year increase in EBITDA, showcasing operational progress.
⚠️ The company faces a critical risk of missing deadlines for delivering energy to Camesa, potentially incurring a $30 million fine if an extension isn’t granted.
⚖️ Despite being in the robust energy sector, the investment hinges on Camesa’s discretionary decision regarding deadline extensions, creating significant uncertainty.
@ClaveBursatilTV:
“The other day I saw a report from an important Alic in Buenos Aires about Grupo Albanesi, commenting on two things: one good and one bad. First, the bad news. You know the sequence for Grupo Albanesi, the business model, and its current stage. It requested a huge amount of leverage to open several new thermal power plants for which it already has committed sales, signed long-term contracts for energy. They had already sold all those MWs. So, it’s like someone tells you, ‘Hey, look, I’ll buy this many MWs from you for 10 years.’ You don’t have the capacity to sell them yet, but since they signed the 10-year contract, you take on debt to build the thermal plants to finally deliver those MWs. Well, they took the debt. That’s why when you look at the company’s debt-to-EBITDA ratio, it’s high. But the story is that once the plants are operational, it starts delivering energy, gets paid, and the EBITDA starts to rise. Then the debt-to-EBITDA ratio falls because it pays down debt while EBITDA increases, balancing the ratio. The bad news, which I’ll tell you first, is that Grupo Albanesi, or Generación Mediterránea which is Grupo Albanesi, is not managing to get the plants operational on time to deliver the energy already sold to Camesa. What could happen? Well, there are two alternatives: one, Camesa signs an extension, a deadline extension, and nothing happens, they keep waiting. According to what I asked the AI, because I don’t know where to find this information, this has happened before, and Camesa granted extensions. But if Camesa doesn’t grant an extension, what happens? It imposes a fine on Albanesi, which would be around $30 million for non-compliance. That’s the bad news. It’s very bad, but let me tell you the good news. Albanesi’s EBITDA increased by 70% from last year to this year. So, the idea of investing in this company with such an uneven debt-to-EBITDA ratio because it leveraged heavily for these plants… well, when EBITDA rises, it will dilute the debt-to-EBITDA ratio. Well, EBITDA is rising 70% year-over-year, but it’s not managing to deliver the energy to Camesa on time. So, what weighs more? I don’t know, but the truth is there’s a discretionary factor here that nobody knows. Surely there’s some inside information, and someone will get rich off it. The key is knowing whether Camesa signs the extension for Albanesi or not. If Camesa gives it the thumbs down, puts it in the guillotine, or says, ‘No, no, go ahead, I’ll wait.’ And that will depend on some guys at Camesa. In fact, the state is the main owner of Camesa. So, whoever knows that… you know how it always happens in Argentina, before news breaks, people operate beforehand. You already see it in the market. I don’t know what will happen, but well. I like the EBITDA part… Unlike other Argentine companies, it’s not an industrial company affected by inflation, a low dollar, etc., because the energy is already sold, and Argentina demands more energy each time. It’s not like Celulosa, which is struggling because it sells little, isn’t competitive because it’s an industrial company in Argentina, and industrials are doing poorly. Look at Aluar, look at all Argentine industrials, Ternium, they’re all doing poorly, and Celulosa is doing poorly too. All industrials are doing poorly. But Generación Mediterránea or Albanesi, let’s say, is not an industrial; it’s an energy company, and the energy sector is booming and growing in Argentina. That doesn’t mean it has to do well, but not for the same reasons Celulosa might do poorly, because it’s not an industrial company. So if it does poorly, it’s for another reason.”
Watch the exact part of the video where @ClaveBursatilTV talks about Grupo Albanesi here:
Watch the video on YouTube
Read more articles analyzing Grupo Albanesi (ALBA) at the provided link. ALBA stock.
