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Great performance in line with the market’s expectations. Earnings growth was driven by the growth in the RAB and the July commissioning of the new Piombino Floating Storage Regasification Unit (FSRU), an operating floating LNG import terminal approved in Q3 22.
Companies: Snam (SRG:BIT)Snam S.p.A. (SRG:MIL)
AlphaValue
Revenues increased in 1H23 on the back of a higher Regulated Asset Base for 2023 at €22.4bn vs €21.4bn in 2022. This higher RAB generated an additional contribution of €37m, whilst an increase in volumes regasified contributed €20m, offsetting a y €11m decline in volumes of transported gas.
Snam benefited from a higher Regulated Asset Base (RAB) and +100% growth in the energy efficiency business resulting in a strong 12.9% growth for the top line. However, EBITDA remained almost stable with a modest 1.5% growth as the group had to sell gas inventory excesses accumulated at higher prices in the past quarters. The guidance was confirmed for 2023 with an EBITDA target of €2.4bn and a €70m contribution from the Energy Transition business.
Despite the solid 11.1% growth in revenues to €3.32bn, Snam’s results were negatively impacted to the tune of €130m owing to a reduction in the WAC, combined with a rise in utility costs that weighed on earnings amidst an unprecedented volatile energy market environment. The group intends to leverage a higher contribution from the unregulated businesses, through the energy transition activities, to boost its growth.
As part of its 2022-26 strategic plan, SNAM focused on three pillars around supply security, sustainability and affordability. The Italian group aims to allocate a large proportion of its €10bn investment plan to gas infrastructures, through Floating Storage and Regasification Units (FSRUs) and pipelines to optimize storage and network systems, but also to clean energy sources, hydrogen and biomethane. However, there are reasons to remain sceptical about the group’s strategy, due to a lower-than
Snam delivered a solid performance, enabling the group to confirm its FY202 guidance, with 10.3% growth in revenues to €2.4bn. The reported EBITDA for the 9M2022 period declined by 0.6% to €1.716bn, mainly due to the reduction in WACC amounting to €95m, of which €76m concerning transport. Over the 9M2022 period, the decrease in regulated revenues was again offset by the revenues of the non-regulated activities as well as the energy transition business segment.
Snam’s recent diversification strategy is now paying off. The decrease in regulated businesses due to a lower WACC (EBITDA down 0.7%) has been more than offset by the contributions from Associates, mainly Interconnector Limited in the UK. This is another step forward for the non-regulated businesses, which are becoming ever more important within Snam’s business model. As a result, thte net income guidance for the full-year has been increased to €1,130m (+2.7%).
Companies: Snam S.p.A. (SRG:MIL)Snam S.p.A. (0NQP:LON)
Snam’s Q1 22 EBITDA was up 5.2% yoy to €588m driven by RAB growth, higher volumes and a one-off sale of gas inventories that more than offset a cut in the regulated WACC. The continuing expansion of the non-regulated businesses (+98% yoy at revenue level) is a positive. Moreover, a larger perimeter for associates also pushed net income. Overall, a sound set of results although the growth drivers below the top-line are not that exciting. FY22 guidance has been confirmed.
Snam released FY21 figures in line with estimates, even if we welcome a slight beat at the net income level. Guidance for FY22 appears rather weak, projecting a 10% decline in net income. The group’s direct exposure to Russian gas is confirmed to be low, in the order of 1.5% of transported volumes. Our neutral view is confirmed given the current dividend yield of 5.5%, below the long-term average, even if it can admittedly embody a safe-haven in these turbulent times.
The Italian utility has unveiled its new strategic roadmap towards hydrogen. In 2021-25, it will invest €8.1bn with a clear shift from networks to green projects, especially hydrogen. As a future catalyst, we note the possibility to list De Nora in 2022 depending on ‘market evolution’. The financial targets are relatively in line. In all, we like this new strategic framework. Our model and investment case are under review and will be updated soon, even though nothing clearly surprising was ann
Snam released relatively good results for its 9M 21, slightly above expectations, driven by regulated businesses and riding on the bullish energy efficiency’s wave. The strong performance of equity investments also pushed net profit by +7.4%. Note, however, the negative impact of staff costs on EBITDA. Next trigger: the new strategic plan on 29 November.
H1 came in slightly below expectations. Total revenue increased by 13.4% yoy, mainly due to the growth in regulated revenues, the energy transition business, and the overall recovery from business customers. Adjusted EBITDA came in at €1,163m (+5.1% yoy) due to the continuation of its efficiency plan. Technical investments, increased by 23.9% yoy, were in line with the investment plan announced earlier this year. Thus, FY21 guidance was confirmed.
No major surprise for the Italian utility that published Q1 results in line with expectations. Growth in the energy transition business (+113% yoy) was the main driver, especially regarding efficiency activities. EBITDA came in at €559m (+0.7% yoy, +3% vs Q1 19) as the positive impact from increasing sales and good cost management were offset by continuous investments in hydrogen and mobility platforms. FY21 guidance tentatively confirmed.
FY20 figures came in line with expectations. Adjusted EBITDA came at €2,197m (+1.3%). The dividend proposal of €0.25 was also expected. The good news came from the FY21e adjusted net profit guidance, which is expected to be around €1,170m. We confirm our positive recommendation on the stock, considering the above 5% dividend yield is highly attractive.
The €7.4bn new investment plan aims to develop its green transition related activities, mainly hydrogen, with the objective to be carbon neutral by 2040. We confirm our positive view that Snam has a secondary and judicious means of obtaining indirect exposure to the hydrogen ramp-up while maintaining a prudent risk/return ratio.
Companies: Snam S.p.A.
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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
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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
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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
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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
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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
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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
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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.
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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
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