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We have dropped our coverage of Hera owing to internal reorganisation. Our valuation range and estimates are therefore no longer valid.
Companies: HERA (HER:BIT)Hera S.p.A. (HER:MIL)
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Hera posted a great performance in the first nine months of 2023, with increasing contributions from Electricity, Waste, and Water, while Gas earnings decreased moderately in Q3 following a weaker start to the year. Earnings benefited from both an organic effect with the acquisition of new customers and M&A transactions. No guidance has been communicated for FY23 but these results are in line with the expected growth in the 2026 trajectory.
AlphaValue
Solid Q3 trends; on track to reach FY23 consensus profitability estimates Q3 EBITDA growth was c. 18% YoY (to EUR289m) thanks to a positive performance in the electricity sector, which continued to benefit from higher unitary margins and higher sales from energy efficiency projects. On the contrary, the gas sector suffered from a tough basis of comparison as it normalized in 2023 and waste EBITDA was flattish in Q3 despite the consolidation of ACR. The customer base growth accelerated to c. +9%
On the same track as in the first quarter and with little surprise, Hera published a solid H1 23 with rising earnings in Electricity, Waste and Water, whilst Gas decreased moderately after a mild winter that weighed on the Q1 23 earnings. The group does not provide a FY 2023 guidance but remains confident that it can deliver the financial objectives of the Business Plan 2026.
Q2 2023 above our expectations due to supply margins expansion Hera has unveiled its Q2 2023 results, which were higher than our estimates: EBITDA +19% YoY, EBIT +21%, net income +7%. The main driver of this set of results was the electricity division, which took advantage of higher unitary margins. Net Debt reached around EUR 4,146m, up vs. EUR 3,815m posted as at the end of Q1 2023. This dynamic is mainly connected with the dividend payment, the capex deployment and a temporary NWC effect lin
Hera published a solid Q1 performance with strong organic growth in its two most strategic growing business units, energy and waste, amidst resilience for the gas segment. The Group will continue to focus on these strategic business units, both internally and supported by M&A, as outlined in its 2022-26 strategic plan presented earlier this year. We are confident in the group’s strategy, particularly with regard to the moderate 2.84x leverage and its past experience in delivering on acquisitions
Q1 2023 a tad higher than expected. Debt reduction driven by gas destocking Hera has unveiled its Q1 2023 results, which were a tad higher than our estimates: EBITDA +9% YoY, EBIT +7%, net income +1%. Net Debt reached around EUR3,778m, down vs. EUR4,250m at end 2022. This dynamic is mainly connected with the reduction in stored gas. We note that the level of gas stored was at 55% of the capacity as at the end of March, which compares with ca. 84% at the end of 2022. Hera was one of the largest c
A more favourable context: easing inflation, rate hikes end and allowed returns upside Easing inflation pressure and the potential imminent end of rate hikes are positive elements for the Italian utility sector and thus for Hera (easier refinancing/debt cost management/DPS appeal). In addition, based on the changes of parameters that drive the revision of the WACC/allowed return, we estimate that the theoretical change in the allowed return would be 0.94%, which could mean the new allowed retur
Hera reported FY2022 results above the market consensus and the group’s outlook, but below our expectations, unsurprisingly mainly attributable to growth in the gas activities as well as the waste management business unit, amidst a soaring energy price environment. The regulated activities suffered from a lower revised WACC although this was notably offset by good progress in the unregulated businesses, through energy transition solutions, circular economy and solutions. The group increased its
No surprises from Q4 2022 results. Dividend yield at ca. 5% Hera has unveiled its Q4 2022 results, which were in line with the preliminary figures unveiled early in February when the company announced its new business plan: EBITDA + 23% YoY, EBIT +36%, net income +315%. On a FY basis, EBITDA was up ca. 6% YoY, EBIT +3% and net income -4% (ca. +1% if we exclude 2021 positive one-offs). The net financial position reached EUR 4.25bn, with a net debt/EBITDA ratio of 3.28x (ca. 2.9x if we exclude the
With a well-balanced business mix and almost no exposure to fluctuations in energy prices/windfall profit taxes, we expect Hera to benefit from steady growth, no major short-term refinancing needs and relatively low leverage. The new plan increases visibility and confirms the dividend policy. 2023 Outlook for Sector Valuation and Performance The sector screens a touch expensive vs. the market but it maintains its historically superior dividend yield and still offers an attractive earnings yie
The new strategic plan introduced by Hera for the 2022-26 period highlights a better balanced business model between regulated activities and liberalised businesses, still focused on waste, networks and energy. After an unprecedented year, the group reported a 19% higher than expected dividend to €0.125 for 2022 and intends to invest more than €4.1bn by 2026, up by 59% vs the last 5-year plan, on a more well-balanced strategic plan, leveraging on both organic growth and M&A operations.
The results reported by Hera for the Q3-2022 again highlighted a resilient business model, especially in such a volatile environment with many uncertainties. Despite the current energy crisis, the Italian utility showed its robustness thanks to its diversified activities, combined with a well-balanced profile between internal growth and M&A. The group continues to make significant investment in its transition to renewable energy as well as a strong effort in gas storage.
A resilient set of results, bang in line with our estimates Hera has unveiled its Q3 2022 results, which were bang in line with our estimates: EBITDA almost flat YoY; EBIT -3% and net income adj. -30% (due to higher provisions linked to higher prices/revenues). The main EBITDA drivers were the positive performance in the energy efficiency sector, the quality premia in the water and businesses and the higher contribution of the plastic recycling business. Net debt reached EUR 4.49bn, up vs. EUR 3
Elections confirm polls, with the right-wing coalition winning a majority of seats The Italian elections resulted in the right-wing coalition led by Giorgia Meloni of the Brothers of Italy winning a majority of seats in both lower and upper chambers, though far from the 2/3 needed to change the constitution. The new government will officially start in the week of Oct 10th, and after an initial phase of selecting ministers, it can begin effectively governing from early November. Thus, we may ne
Companies: SAB LUVE FNM IRE MN SES HER AIW IF TIP FNM IRE GHC CEM IGD WIIT COM SAB IF UNIR SCF CEM ILTY MN LUVE IGD TIP HER SES ORS
Research Tree provides access to ongoing research coverage, media content and regulatory news on HERA. We currently have 22 research reports from 2 professional analysts.
Strix has reported FY23 results to 31 December 2023 with adjusted PAT of £20.1m, in line with our updated forecast and company guidance provided in January. Revenue grew 35.2% to £144.6m, benefitting from the full year inclusion of the Billi acquisition, albeit slightly below our forecast of £151.0m. Its core Kettle Controls division also performed robustly, growing 2.7%, ahead of the broader market and indicating market share gain. Recent acquisitions have noticeably improved the Group’s growth
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The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
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Cohort announces that its subsidiary SEA (Systems Engineering and Assessment Ltd.) has been awarded a major contract by the UK’s Ministry of Defence to provide Electronic Warfare Counter Measures (Increment 1a) (EWCM 1a) to the Royal Navy with a total value of at least £135m. This includes provision and support of SEA’s Trainable Decoy Launcher System, Ancilia. At the FY 24 interim results Cohort had commented on an overall “increased tempo” of order intake. The Group reported a closing order b
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Equity Development
Positives emerged, particularly in H2, as the recovery commenced within the kettle controls market. Billi was the architect of the revenue improvement, with LAICA also delivering a double-digit increase in the top line. Margins improved, notwithstanding a change in the mix. Encouragingly, investor concerns on debt were allayed with the careful management of cash, and latterly as bankers raised the net debt/EBITDA covenant to 2.75x. With further emphasis on costs and cash conservation and a lik
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Quadrise continues to advance towards commercial revenues for its innovative fuel and biofuel technologies, with each of its projects approaching key milestones in 2024. Preparatory steps for the MSC Shipmanagement (MSC) fuel trials are now complete and fuel supply agreements are nearing finalisation. Quadrise will achieve its first licensing revenues on the successful completion of Valkor’s project financing (timing uncertain). Quadrise also successfully concluded its Morocco trial, paving the
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Judges Scientific is a group involved in the buy and build of scientific instrumentation businesses. Testament to the strength of its highly engineered offer and global diversified customer base, total revenue increased an impressive 20.2% to £136.1m (organic +15%), with adj. PBT +7.5% to £31.7m (FY2022: £28.3m), 3.1% ahead of our estimate of £30.5m. Fully diluted (FD) adjusted EPS increased a more muted 2.6% (impacted by anticipated tax headwinds) to 368.5p (basic adj EPS 374.5p), 3.4% ahead of
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Gelion has reported in line H1 FY24 results that demonstrate continued strong cash management and steady progress in its pursuit of next generation lithium-sulphur battery technologies. Encouraging early test results justify last year’s IP acquisitions and validate Gelion’s Li-S battery technology plan, with additional progress expected to be reported in H2 alongside its pursuit of a strategic partner for its planned Advanced Commercial Prototyping Centre (ACPC) facility in Australia. There is a
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Forterra’s FY23 (to 31 December) earnings were slightly higher than guidance, which was raised in January, with resilient pricing partly offsetting a steep fall in demand among its main end users, large housebuilders. Our estimates are broadly unchanged, other than reflecting a more conservative stance on the final dividend. Despite a cautious tone in the outlook statement, we believe the largest housebuilders may now rebound more strongly than smaller peers.
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Progressive Equity Research
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