FY20 result (preannounced) - No surprises
Back in early February Enel pre-announced its FY20 revenue figures: EUR65bn, Ordinary EBITDA EUR17.9bn, EBITDA EUR16.8bn (-5.1%) and Financial ND figure EUR45.4bn. The FY20 results release explains the flattish ordinary EBITDA performance (+1%), which came as a result of the strong performance of ordinary EBITDA in Italy (+8%) and Spain (+15%), fully offsetting the weakness in Latam (-22%) and North America (-9%). The adjusted NP was broadly in line with expectations and the company guidance. The big gap between the Ordinary NP (EUR5.2bn) and the reported one (EUR2.6bn) is largely explained by impairments in Mexico, Australia and Argentina (-EUR537m), impairments in Slovakia (EUR833m), impairments in coal plants (EUR598m) and restructuring plans for decarbonisation and digitalisation (EUR537m).
Unchanged outlook, but too challenging in our view
Enel confirmed its outlook for the FY21 (EBITDA EUR18.7-19.3bn and NP EUR5.4-5.6bn) despite Enel''s FX scenario (announced in Nov-20) remaining much more favourable than the current MTM. We see the confirmed outlook as challenging given the current FX environment and expect the Latam divisions to disappoint management''s expectations. Our numbers for F21 remain well below guidance (-4.4% at the EBITDA level and -9% on NP).
SOTP trading at a generous premium to the parts
We have no doubt about Enel''s strong potential to benefit from the EU Green Deal and we factor into our numbers a Capex plan in line with the one announced in recent CMD. Nevertheless, we fear earnings risk as a result of a less favourable FX scenario and lower returns impacting investments in renewables, subsequent to increased competition. We believe that Enel''s earnings profile is lower quality and more volatile than peers and this explains why, in our view, it should trade at a discount to the sector. Given it is highly exposed to emerging markets and liberalised activities, we see Enel...
