Deutsche Bank Initiates Kenon Holdings With Hold Rating

In a report published Monday, analysts at Deutsche Bank initiated coverage of

with a Hold rating and price target of $24. The analysts said that Kenon is a "unique and interesting kind of utility holding company." The company holds 100 percent ownership of IC Power, a rapidly growing IPP developer, primarily focused on Israel and Peru. In addition, it has a 50 percent stake Chinese auto manufacturer Qoros, apart from stakes in shipping firm ZIM, TowerJazz and others. "The bulk of the value resides in IC Power and we like its two major contracted growth projects, CdÁ and Samay. However, we remain on the sidelines with KEN as continued investment into Qoros, a high-risk/highreward business, chips away at near-term value and cash flow," the analysts said. IC Power has witnessed 26 percent CAGR since 2008, with revenue and EBITDA increasing five- and eight-fold during the same period, and its development track record is expected to benefit shareholder in the longer term. The analysts expect this division to see significant growth through 2018. According to Deutsche Bank, "Management is committed to providing shareholders direct access to KEN's assets, allowing the market to determine the optimal owners for each asset. This strategy is set to begin with a spin-off of TSEM shares, scheduled for mid-2015 and is expected to accelerate into 2016 with IPOs of IC Power and ZIM possible." However, the analysts believe that following the rally in April, the stock holds limited upside in the foreseeable future.