Topic: Q1 clearly underpins MPCES' operational progress (ramp-up of production portfolio) and successful cost cutting program. At the same time, it remains highly attractive with shares trading on a ~ 65% discount to the NAV of the company's assets.

Q1 sales grew by 51% yoy to $ 2.5m as the energy output almost doubled to 30 GWh, offsetting the decreased average energy price of 77 $/MWh (-12.5% yoy). While the latter was the result of a changed PPA mix (new projects with lower PPA prices), the increase in energy output was driven by the ramp up of the company's production portfolio, which now stands at 79MW.

The group's Q1 EBITDA increased strongly from $ -0.7m to $ 0.6m (25% margin) thanks to the positive operating leverage but also the company's efficiency measures bearing fruit. Compared to last year's Q1, management was able to cut operating expenses (excl. project opex) significantly by 32%.

FY24e guidance remains unchanged. Management expects significant growth across all of its KPIs; energy output +44% yoy to 145 GWh, project revenues +32% yoy and project EBITDA +93% yoy. This is largely in line with our estimates and is first and foremost driven by the ramp-up of its production portfolio. Mind you, over the course of FY23, the company finalized two projects (Los Girasoles in May and Planeta Rica in November), which will impact the full year of 2024.

Development pipeline remains promising. MPCES has begun construction on a 65MW PV project in Guatemala (Feb. 26th), which should boost the group`s top-line by some $ 4m p.a. (reflecting the targeted 50% ownership) from mid 2025 onwards. The remaining mature development backlog features additional 225MW of PV assets in the target region.

Valuation remains attractive. Despite the roughly 30% rebound since the lows in November of last year, MPCES’ shares remain strongly undervalued, in our view. This becomes particularly clear when considering the NAV of the companies assets as of Q1 2024 (renewable assets usually sell at a premium to their book value) of 23.5 NOK per share incl. a 30% discount (see page 2).

Reiterate BUY with an unchanged NOK 23 PT based on a sum-of-the-parts (SOTP) valuation, separately accounting for the value of its current IPP portfolio (NPV) and its development backlog (multiple).