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On Monday, Jefferies analysts upgraded VH Global Energy Infrastructure stock (ENRG:LN) from Hold to Buy. The decision follows a review of the company’s transaction activity, particularly focusing on its Brazilian assets.
The analysts noted that the Brazilian hydro asset is valued conservatively with a fiscal year 2024 EBITDA multiple of 6.9x. This valuation is approximately 35% below the average of comparable deals over the past two years, suggesting a potential upside.
In contrast, the Brazilian solar asset is marked around 10% above the average of similar transactions. It is priced higher than most distributed generation deals, with a fiscal year 2024 EBITDA multiple of approximately 20.9x. The analysts highlighted that this valuation partly reflects some sites not yet being operational, indicating possible downside risks to the solar asset’s sale price.
Despite the potential risks associated with the solar asset, the analysts believe that the hydro asset’s larger weighting in VH Global Energy Infrastructure’s portfolio could offset these risks. The overall assessment led to the upgrade of the stock rating to Buy.
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