Apex Capital Recommends Buy on Teralight Stock, Sees 56% Upside
Apex Capital has issued a "buy" recommendation for Teralight stock, setting a target price of NIS 25 per share, representing a potential upside of 58% from the review's publication and approximately 56% from its current trading price of around NIS 16. The valuation is based on a Net Asset Value (NAV) model, where each of Teralight's solar projects is assessed individually using Net Present Value (NPV).
The investment thesis by Apex Capital focuses less on Teralight's current financial results and more on the projected pace of its projects coming online in the coming years. While Teralight's revenue decreased to NIS 35.5 million in the first half of 2026 from NIS 38.6 million in the same period last year, Apex notes that excluding NIS 3.5 million in revenue from EPC activities and a substation for the Israel Electric Corporation, there was a slight increase, primarily due to full revenues from the Taanach 1 project. Despite the revenue dip, gross profit rose to NIS 16.2 million from NIS 14.6 million, and operating profit increased to NIS 6.8 million from NIS 3.7 million. The company remained unprofitable, but its net loss narrowed to approximately NIS 7.5 million from about NIS 14 million.
A significant portion of Apex's outlook for Teralight, particularly for 2027-2029, centers on its future project pipeline. The company has a backlog of approximately 2 gigawatts (GW) of photovoltaic (PV) capacity and 8 gigawatt-hours (GWh) of energy storage in Israel, with potential expansion into Europe and a project in Canada. Apex forecasts a gradual increase in electricity sales revenue to around NIS 1.2 billion by 2029, with EBITDA projected at NIS 900 million and Funds From Operations (FFO) at NIS 630 million. These are company projections underpinning the valuation, not yet achieved results.
Key assets highlighted include the Magellan project in the Jordan Valley, planned to include 350 MW of solar and 1,750 MW of storage, expected to connect in the first half of 2029 with projected annual revenues of NIS 318 million and EBITDA of NIS 267 million. Another growth driver is solar hedging, with a NIS 250 million credit line from Bank Leumi and Migdal as a partner. The initial hedging project, already under construction or nearing it, includes 51 MW and 119 MWh of storage, with projected revenues of NIS 47 million and EBITDA of NIS 33 million. Taanach 3, a 50% owned 150 MW, 690 MWh storage project expected to connect in the first half of 2028, could generate average annual revenues of NIS 95 million and EBITDA of NIS 59 million (on a 100% basis).
Teralight has also recently raised its forecasts, with 2027 and 2028 revenue projections updated upward by 10% and 7.7% respectively, and EBITDA forecasts increased by 11.5% and 3.2%. The company is also exploring a potential entry into Europe, having submitted a non-binding offer to acquire 70% of a European renewable energy company with a 2.5 GW PV and 3.8 GWh storage pipeline across France, Italy, and the UK. The proposed deal is valued at $165 million, with an option for a further $50 million capital investment to increase the stake to 75%. Due diligence is ongoing, with negotiations extended until the end of September.
Apex's valuation model assigns NIS 252 million to Teralight's yielding assets, NIS 471 million to assets under construction and development, and NIS 785 million to advanced development assets. Initial stage projects are valued at NIS 290 million with a 75% probability factor. Including net financial assets and future EPC/OEM activity profits, Apex arrives at a total valuation of approximately NIS 2.06 billion, translating to the NIS 25 target price per share. However, this upside is contingent on the projects progressing as planned. Apex identifies risks including rising interest rates, failure to meet expansion and revenue targets, changes in electricity tariffs, operational risks, and regulatory changes.
