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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.
Companies: Enel (ENEL:BIT)Enel SpA (ENEL:MIL)
AlphaValue
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Companies: Enel SpA
Research Tree provides access to ongoing research coverage, media content and regulatory news on Enel SpA. We currently have 91 research reports from 2 professional analysts.
The FY24 year-end update is very upbeat signalling trading being materially ahead of expectations, with a better-than-expected profit out turn and stronger cash generation. It continues to strengthen margins through efficiencies and investment in modern equipment. The order book remains close to record levels providing a robust view of future forecasts. In FY24E we upgrade EPS by 11% and in FY25E a significant upgrade of 27.6%. It looks capable of declaring a dividend in FY25 as well as manageme
Companies: Renold plc
Cavendish
Companies: BILN ELCO NXQ CUSN ATG
FY23 results show very strong growth over FY22, driven by strong Structural Steel activity, with results slightly ahead of upgraded profit expectations, while stronger than expected cash flow resulted in an unexpectedly generous dividend of 33p (offering a FY23 yield of 7.0%). The group now has net cash of £22.1m and is debt free and is therefore in a strong position for potential M&A activity. Following the recent £90m of new orders to increase the order book to record levels we conservatively
Companies: Billington Holdings Plc
Another Good Year of Diversified Growth with More to Come in 2024 CCapital have released their Q1 operating results. Overall, revenue has come in slightly lower than expected at $80.2m vs TamE of $85.9m but is largely tracking in line with our FY24 annual estimate and we note the company has maintained guidance. Drilling revenue for this quarter was impacted by a fall in utilisaztion rates as well as general remobilisation geographically but we expect a strong recovery throughout the year as k
Companies: Capital Limited
Tamesis Partners
Plant Health Care announced it has signed a distribution agreement with AMVAC, an American Vanguard Company, to support commercialisation of novel fertiliser products incorporating Plant Health Care's Harpinαβ in China starting in 2024. The novel product combines Harpinαβ technology with an AMVAC fertiliser and is expected to help growers improve crop quality and yield as part of an integrated and environmentally responsible crop production programme. AMVAC continues to evaluate Plant Health Car
Companies: Plant Health Care PLC
Companies: 88E RNO TRIN KRM EXR BOOM
Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appear
Companies: Severfield Plc
Edison
discoverIE’s March year-end update confirms a strong operational performance in challenging markets. Following two years when sales increased by +48%, FY 2024 Group sales were +1% ahead of 2023 at CER (reported -3%) driven by a +2% contribution from acquisitions and organic -1%. As expected, organic growth returned in the later part of the year (Q4 +2%, +11% sequentially) and the order book has reverted to normalised levels of c.4.5 months’ sales, which – combined with a continuing strong pipeli
Companies: discoverIE Group PLC
Companies: Iofina plc
Canaccord Genuity
Companies: PLL TLG HZM SAV KAV KP2 SVML
SP Angel
Acquisitions have been an important element of Severfield management’s growth strategy, with the aim of adding new products, sectors and regions to what we have identified as exciting long-term organic opportunities. In this Spotlight report, we focus on the group’s targeted M&A approach, highlighting three significant deals.
Progressive Equity Research
Liberum
Invinity’s update on discussions with strategic investors reveals interest from multiple parties. While this has slightly delayed finalising an agreement it increases the potential for a better outcome. Although details are unknown at this stage, we think there is enough in the statement to be comfortable that any agreements will be consistent with the company’s strategy of growing market share in core markets and using a licencing and royalty model in other markets.
Companies: Invinity Energy Systems PLC
Longspur Clean Energy
Severfield’s full-year results to March will be ‘slightly above’ the Board’s expectations, according to today’s trading update, with net debt significantly better. We maintain our PBT estimates for both forecast years, which are ahead of consensus, but reduce our net debt for FY24E. Record orders were boosted by the steel specialist’s European operations, after last year’s Voortman acquisition, while the Indian JV has seen ‘another step up in profitability’. The group has also launched its first
Companies: ATOME PLC
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