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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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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
Companies: Strix Group PLC
Zeus Capital
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Liberum
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Cavendish
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
Companies: Cohort plc
Equity Development
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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
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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Hardman & Co
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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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Edison
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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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.
Companies: Forterra Plc
Progressive Equity Research
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
Companies: Gelion PLC
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