ACWA: Compelling renewable platform, but premium valuation

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ACWA: Compelling renewable platform, but premium valuation

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ACWA

Compelling renewable platform, but

premium valuation

Initiating Coverage: UNDERPERFORM | PO: 154.00 SAR | Price: 181.00 SAR

Initiating at U/P with SAR154 PO, c15% downside 19 May 2026

We initiate coverage on Acwa, the Saudi-listed developer of power and water projects, with Equity

an Underperform rating and a SAR154 PO. Our rating is driven by: 1) the uncertain delivery

path and execution risks linked to near doubling of generation capacity to 175GW+ by 2030; Abhishek Kumar >> Research Analyst

2) elevated net debt/EBITDA of 6.9x, limiting financial flexibility and raising the risk of Merrill Lynch (DIFC)

equity dilution (like 2025 rights issue); and 3) a demanding valuation with no dividend yield +971abhishek.kumar29@bofa.com4 425 8227

support. The stock trades at 36x EV/EBITDA and 57x PE in 2026E, with multiples Sashank Lanka >>

compressing to high-teens PE by 2031E. Acwa is a high-quality developer with strong Research Analyst

Merrill Lynch (DIFC)

strategic backing, but we believe more attractive entry points are likely to emerge once +971 4 425 8231

valuation, growth, leverage and execution risks are better balanced. Key upside risks are sashank.lanka@bofa.com

stronger-than-expected growth and accelerated asset monetisation leading to lower debt.

Execution risks weigh on generation capacity addition

Stock DataAcwa is targeting near-doubling of generation capacity from 93GW today to 175GW+ by

2030 and that drives c20% EBITDA CAGR in 2026-30E. However, the trajectory and Price 181.00 SAR

timing of growth depend on the new bid pipeline, which is not certain. Also, under- Price Objective 154.00 SAR