CMD: A plan in tune with the times and what investor are seeking?

This new strategic plan announced by Flavio Cattaneo, who took up his post last spring, has everything going for it at first glance. A reallocation of capex revised slightly downwards with more in Grids, less in Renewables, still no offshore wind and more financial discipline enhanced by a cost-cutting plan. Everything sounds aligned with what investors want to hear at the moment.

9M23: Slight increase in the guidance, final leverage target on track

A strong quarter for Enel has resulted in a better-than-expected performance, particularly in the End-user markets. This, combined with the positive results in the grid activities in LATAM and the renewable activities of Enel GreenPower, helped offset lower results in Thermal Generation and Trading. As a result, the high end of the guidance for full-year 2023 EBITDA has been raised by €1.5 billion.

H1 23: lower revenues amid lower prices but EBITDA up significantly

As expected on the track of Q1, energy prices weighed on Enel’s revenues but the group succeeded in generating higher margins in the backdrop of a better operating performance by Enel Grids and its final customers of End-User Markets. The group confirmed its FY2023 ordinary EBITDA guidance of €20.4-21bn, a DPS of €0.43, and indicated c.60% of the €21bn asset disposal programme has already been achieved.

Q1-23: Green Power and Grids took the lead on Enel's growth

Like a few other peers in the sector, the normalization in energy prices weighed on Enel’s revenues in the Q1 which recorded a 22.6% drop to €26.141bn. This was owing, in particular, to Thermal Generation and Trading as well as the End-user (retail) market. The Italian utility remains however confident in its ability to achieve its assets disposal plan and net debt reduction target for the year. The new touchy topic is now focused on governance and the ew board to lead the Italian liner.

FY2022: Guidance met, net debt reduction now the focus

After a challenging 2022 and a disruptive energy market environment, Enel met its guidance provided during the last CMD back in November and even delivered higher-than-expected operational profits, supported by both higher volume and of course a price effect. Although the group managed to land on its feet and deal with last year’s liquidity issues, net debt reduction through assets disposals will remain the main topic in 2023.

Q3 22: Low water supply and higher sourcing costs weigh on margins

Enel reported a 84% increase in revenues to €108.177 bn, attributable to all business units and mainly driven by a rise in the volume of gas and electricity sold at a higher average price amidst the prevailing energy crisis as well as an increase in electricity generated. Rising sourcing costs together with a significant drop in hydropower generation due to a poor water supply weighed on ordinary EBITDA for the 9M2022 period, down 0.8% to €12.68 bn.

H1 22: renewed confidence

While there were no surprises on the results side which came in bang in line with expectations, Enel reassured the market with a series of positive comments. What may seem trivial in normal times is now valuable in a context wherein the share price has collapsed by c.40% over the past year. This paves the way for a return of investor confidence in a company that deserves it – and can embody good value for money.

Q1 22: Enel did the job but took on more debt

Strong operational results but soaring net indebtedness are the two key takeaways from Enel’s Q1 22 release. In our view, they offset each other, resulting in a mitigated set of results, even if we want to believe that the good results will recur and the higher debt is temporary. It does however add uncertainty to a business that did not really need it, confirming our preference for pure players versus integrated utilities during such times. Meanwhile, wait and see.

Preliminary FY21: a strong beat for Enel, positive read-across for gas players

Enel surprised the market by delivering strong FY21 preliminary results (revenue + EBITDA). While we do not yet have the exact breakdown, there is no doubt that the gas-related activities have more than outperformed. In the footsteps of RWE a few days ago, the read-across is obvious for Engie, Fortum, Iberdrola and EDP. In the light of these elements, we reaffirm our bullish view on the sector.

9M 21: concerns on indebtedness two weeks before CMD update

Despite several regulatory and FX headwinds, Enel met expectations with EBITDA 1.7% above consensus. However, a substantially higher net debt raises concerns on the mid-term outlook and 2030 roadmap, for which we expect un update during the CMD on 24 November. FY21 guidance remains unchanged, even if we stand slightly below, and the same applies for consensus. Positive view confirmed as headwinds seem already priced in and the CMD should provide short-term catalysts.

Nuke optionality

What if the best solution for the energy transition were … nuclear power? Nuke is back at the heart of political debates in the context of the current energy crisis and massive but insufficient investments in renewables. This short review provides an overview of nuclear power in Europe and speculates on options. This ‘nuke optionality’, hinging on a favourable green taxonomy, is a game-changer for EDF, Centrica, Fortum but also Engie, Iberdrola, Enel and EDP.

H1 21: limits FX damage to back FY21 guidance

After a complicated first quarter which was hurt by FX, Enel posted a slump in EBITDA (-4.9%) as one-offs and FX continued to offset additional renewables capacities and the great recovery in Italy and LatAm. On the positive side, capex remained in an upward trend, even if it mechanically weighed on net indebtedness. This did not prevent the group from confirming its FY21 guidance. Positive view confirmed.

Still and always hurt by FX

Enel released a set of half-tone Q1 results. EBITDA is down by 12.3%, hurt but one-off items and a negative comparable effect but, above all, still affected by adverse FX movements that could become recurring. Guidance for the full year is confirmed, but we are now targeting the bottom of the range. In all, our positive view is reiterated.

Good surprise on net income and dividend

Enel released globally sound FY20 figures, driven by net income and dividend that both beat estimates. The FY21 outlook is confirmed, while mid-term targets for net income and dividend were slightly improved. The group continues offering good visibility on its activity and is massively investing (€10.2bn capex), especially to reinforce its European leading position in renewables. Positive view confirmed.

CMD outlook

Enel has set ambitious renewable energy targets at the 2030 horizon coupled with an accelerated coal exit. In addition, investment in new technologies (batteries and hydrogen) should protect its status as a cutting-edge company. The group will also massively invest to upgrade its networks in Europe, to limit operating costs and cope better with the increasing weight of renewables. We confirm our recommendation. Enel is currently among our top picks.

Supreme (SUP LN) - Initiation of coverage

FY24 Interim results: A record H1 performance delivered revenue growth of 62.5% to £105.1m (H1 FY23: £64.6m), with growth across all divisions: Batteries +1.4%, Lighting +21.8%, Sports Nutrition & Wellness +17.5%, Vaping +32.5% (ex- ElfBar) and Branded Distribution +798.9%, which includes revenue of £26.4m from the ElfBar distribution opportunity, commenced in June. Adj. EBITDA of £15.2m is +88.0% (H1 FY23: £8.1m) benefitting from higher sales, and operational efficiencies. Adj. PBT of £12.6m is

Brickability Group - A diversified and resilient model

Today’s interims are in line with the recent trading update (11th October) and as such we make no changes to forecasts. Revenue of £324.8m represents a LFL decline of 14%, with EBITDA of £25.6m (H123: £25.5m). This is a strong performance, against what is a challenging market backdrop and underlines the benefits of its diversified operating model and focused strategy. We therefore continue to be surprised at the weakness of the share price, especially in the context of a broader peer group. Putt

Epwin (EPWN LN) - Confirmation of FY23 estimates and buyback announced

Epwin has released a brief trading update confirming that it is on track to meet FY23 estimates. It has also announced its intention to start a buyback, indicating the Board’s confidence in the business going into FY24, despite the volatile operating environment. Zeus leave profit estimates unchanged across the forecast period. This is a continuation of the performance over the last few years, the business has met or beaten consensus numbers since FY20, has not raised equity and managed its bala

Supreme Plc+ (SUP, House Stock at 110p) - Exceptional H1 - 'significantly' raised FY24F guidance

Morning Note – 28 November 2023

Strong H1 results raise full year outlook

The H1 outcome was as indicated in the recent (18 October) Trading Update. Group guidance for the full year is now raised: from revenue of £195m - 205m to £210m - £220m (ED estimate was £204.2m); (adj.) EBITDA from £28m - £30m to £32m - £35m (ED estimate was £29.0m). From incremental EBITDA of c.£4.5m, c.£1.5m arises from core operations and c.£3.5m from the Elf distribution agreement, which supplies retailers including Tesco, Morrisons, One Stop and WHSmith. A series of initiatives – branding

Epwin Group+ (EPWN, House Stock at 67p) - Trading update and share buyback

Making positive progress on all fronts

UK-Listed Energy Sector: Review of the UK oil and gas landscape – why the country needs it, current policy and tax

The front of this note takes a look at the UK oil and gas sector, why domestic production is advantageous, what the main political parties think, and what could happen going forward. The latter part contains a review of the companies in our coverage – some that are UK centric, which give exposure to the note’s wider theme, and others that are focused elsewhere.

James Cropper + (CRPR, House Stock at 725p) - Directorate changes

Plant Health Care - Outperforming the unprecedented destocking

Plant Health Care has announced a trading update, noting that market conditions in the wider agriculture market have deteriorated but that it continues to outperform the wider market with growth in all regions except the US. In the US, aggressive inventory destocking means orders that were expected in 4Q FY23 are now projected in early FY24. Plant Heath Care therefore now anticipates revenue for FY23 to show flat to modest growth over FY22 (which compares to the crop protection sector where reve

Quadrise+ (QED, House Stock at 1p) - AGM update

SP Angel Morning View: Iron ore rises to $135/t as steel inventories fall

LIBERUM: Severfield: Strong growth prospects

LIBERUM: Yü Group: Eight reasons why Yü is winning