ENCE is one of the largest producers of eucalyptus pulp in Europe and the largest generator of renewable energy with agricultural and forestry biomass in Spain. The pulp and renewables businesses are two independent and complementary businesses, legally and financially separate.
The current capitalisation of €793M does not reflect the real value of the sum of both businesses. On the one hand, with the announced objectives, the renewable business is expected to generate around €140M of EBITDA in 2030 (1TWh as a target for biomethane in 2030 and 2TWh in renewable thermal energy), compared to the €45M generated on average from 2015 to 2024. With an EV/EBITDA multiple of 10x, in line with the latest market transactions*, this business should exceed 1.1 billion EV in 2023, excluding the value of minority interests, with an estimated equity value of ≈ €900 million.
*Ence sold a minority stake to Ancala Partners at 10-11 times EV/EBITDA. Greenvolt began trading in 2021; it had biomass plants as its main assets and was listed at 10-11 times EV/EBITDA. It was later sold to KKR at a higher multiple.
On the other hand, the pulp business has generated an average EBITDA of more than €130 million during the same period. With an estimated average EBITDA of €140 million until 2030, assuming from Tenvalue a recurring CAPEX of €40 million, applying a conservative multiple of 10 times free cash flow (cash flow from operations – recurring CAPEX). The estimated equity value is more than €800 million**.
**We prefer to be conservative with the multiples and review them in the future as the company meets its strategic plans.
The sum of the parts gives a value of more than double what the current capitalisation reflects.
