Mytilineos - The future is bright

Mytilineos has been investing heavily to benefit from the energy transition (as humanity seeks to limit global warming to c 1.5°C). We estimate earnings (EBITDA) derived from energy transition activities will increase from 25% in 2020 to 60% in 2025, which will help drive EPS growth of 16% pa over the period, with Mytilineos continuing to achieve superior returns (c 11% ROCE). In our bull case, we forecast EPS increases by 185% by 2025, implying a 23% CAGR in 2020–25e. Our scenario-based analysis suggests the risk-reward balance is heavily skewed to the upside.