Kenon Holdings Ltd. (NYSE: KEN)

Sector: Utilities Industry: Utilities - Independent Power Producers CIK: 0001611005
Market Cap 4.39 Bn
P/B 2.93
P/E 9.20
P/S 5.46
ROIC (Qtr) 0.50
Div Yield % 0.00
Rev 1y % (Qtr) 11.81
Total Debt (Qtr) 1.38 Bn
Debt/Equity (Qtr) 0.92
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About

Kenon Holdings Ltd., or Kenon, operates primarily in the energy and power generation sectors. With a diverse portfolio of businesses, the company is listed on the New York Stock Exchange and the Tel Aviv Stock Exchange under the ticker symbol KEN. Kenon's business activities are conducted primarily through its subsidiaries, including OPC, a leading independent power producer in Israel and the United States, and ZIM, a global container shipping company. OPC focuses on generating electricity using a range of technologies, including natural gas, renewable...

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Investment thesis

Bull case

  • Healthy cash reserves of 1.15B provide 11.16x coverage of short-term debt 103M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong operating cash flow of 233.08M provides 1.90x coverage of SG&A expenses 122.95M, showing efficient operational cost management.
  • Strong tangible asset base of 4.61B provides 3.35x coverage of total debt 1.38B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 150.41M exceeds capital expenditure of 82.67M by 1.82x, indicating strong organic growth funding capability.
  • Cash position of 1.15B provides exceptional 13.30x coverage of minority interest expenses 86.41M, indicating strong liquidity.

Bear case

  • Long-term investments of 1.65B represent a high 1.12x of fixed assets 1.48B, indicating potential overexposure to financial assets versus operational capabilities.
  • Operating cash flow of 233.08M is outpaced by equity issuance of (18.71M) (-12.45 ratio), indicating concerning reliance on equity markets for funding operations.
  • Operating cash flow of 233.08M shows concerning coverage of minority interest expenses of 86.41M, which is 2.70x, suggesting complex corporate structure risks.
  • Tax assets of 3M provide limited offset against tax liabilities of 165M, which is 0.02x, indicating potential future cash flow pressure from tax obligations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 122.95M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Utilities - Independent Power Producers
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VST Vistra Corp. 73.36 Bn -53.28 5.34 17.66 Bn
2 NRG Nrg Energy, Inc. 46.15 Bn 44.25 4.80 12.11 Bn
3 TLN Talen Energy Corp 17.14 Bn 75.84 7.45 2.99 Bn
4 KEN Kenon Holdings Ltd. 4.39 Bn 9.20 5.46 1.38 Bn
5 TAC Transalta Corp 3.50 Bn -28.96 1.95 2.66 Bn
6 DGXX Digi Power X Inc. 0.09 Bn -6.97 2.74 0.00 Bn
7 PAM Pampa Energy Inc. 0.00 Bn 0.00 0.00 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.04 1.83
EV to Cash from Ops. EV/CFO 20.96 49.01
EV to Debt EV to Debt 3.55 3.50
EV to EBIT EV/EBIT 8.00 5.95
EV to EBITDA EV/EBITDA 49.22 35.45
EV to Free Cash Flow [EV/FCF] EV/FCF 32.49 12.20
EV to Market Cap EV to Market Cap 1.11 1.12
EV to Revenue EV/Rev 6.08 5.24
Price to Book Value [P/B] P/B 2.93 0.88
Price to Earnings [P/E] P/E 9.20 6.68
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.64
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.42
Dividend per Basic Share Div per Share (Qtr) 0.00 0.40
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.07
Interest Coverage Int. cover (Qtr) 7.42 69.73
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 81.96 -12.19
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 86.22 146.90
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -3.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 101.31 5.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -34.12 -128.84
EBIT Growth (1y) % EBIT 1y % (Qtr) 100.45 -6.04
EBT Growth (1y) % EBT 1y % (Qtr) 179.16 -8.31
EPS Growth (1y) % EPS 1y % (Qtr) 181.87 -17.95
FCF Growth (1y) % FCF 1y % (Qtr) 164.46 18.34
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.79 7.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.17 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 3.75 1.07
Current Ratio Curr Ratio (Qtr) 4.66 2.39
Debt to Equity Ratio Debt/Equity (Qtr) 0.92 2.48
Interest Cover Ratio Int Coverage (Qtr) 7.42 69.73
Times Interest Earned Times Interest Earned (Qtr) 7.42 69.73
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 85.50 30.25
EBIT Margin % EBIT Margin % (Qtr) 76.00 15.08
EBT Margin % EBT Margin % (Qtr) 65.76 7.19
Gross Margin % Gross Margin % (Qtr) 18.10 26.28
Net Profit Margin % Net Margin % (Qtr) 59.30 5.55