Kenon Holdings: Decent NAV Discount, But Underlying Is Expensive

Kenon Holdings derives most of its value from a 47% stake in OPC, a power generation company with assets in Israel and the US. KEN trades at a 37% discount to OPC's NAV, which is decent but depends on a high multiple for the underlying, in our view. A potential $315 million arbitration award from the Qoros sale could add almost a 10% value bump, but collection is uncertain.