MPC Energy Solution – trading below cash on its balance sheet

MPC Energy Solutions (MPCES) main business activity is to develop, construct, own and operate renewable energy assets. MPCES focuses  on expanding its portfolio in LATAM and Caribbean region. The company has been listed in Oslo since January 2021.

The company has cash on the balance sheet of USD81 mln while trading at 69 million. MPCES trades below its cash on the balance sheet.

The stock should benefit from: 1) Short-term triggers from project development; 2) cash flow generation already in 2022/23; 3) funding secured for its initial growth plan should add meaningful support in the share going forward. 3) increase in NAV multiple due to projects coming to operation

Yesterday MPCES announced an acquisition of operating solar plan in North Mexico.

Our family office is long MPCES from the IPO. The stock trades well below its IPO price now.

Below is a summary from Fearnley morning note today:

MPC Energy Solutions (Buy, TP NOK 65/sh)

  • Acquires solar project in Mexico

MPCES announced yesterday that it has entered the Mexican renewable market through the acquisition of Los Santos Solar I. The project is located in Ahumada, Chihuahua, in the North of Mexico. The plant has been fully operational since 2017 and has installed capacity of 15.8 MWp. The project is part of the advanced backlog which was put forward by MPCES in the last quarterly presentation. The project was financed and built by multinational renewable energy project developer Buenavista Renewables (BRV), with a USD denominated PPA with the German cable manufacturer Leoni Cable and the International De la Salle Educational Network. MPCES has acquired 100% of the project and obtained financing from form the US Government’s Development Finance Corporation (DFC) and the North American Development Bank (NABD). Closing is expected to take place in 1q22. Notably, the project has potential to be extended from 15.8 MWp to c. 90 MWp and MPCES has signed a ROFR with the developer. The extension may be ready-to-build in 2023.  

We continue to highlight MPCES as an attractive investment case. The company is priced below net cash on the balance sheet (as of 2q21) with USD 81m net cash, around USD 69m market cap and thus negative enterprise value of. The stock should benefit from: 1) Short-term triggers from project development; 2) cash flow generation already in 2022/23; 3) funding secured for its initial growth plan should add meaningful support in the share going forward.

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Disclosure: 

The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice.

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