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Simply cheap
- Published:
04 May 2022 -
Author:
Palomo Manuel MP -
Pages:
10
Ordinary EBITDA +8% (broadly in line with consensus)
The high single digit growth at the operational level is largely explained by Latam (+38% YoY) on tariff updates and FX, the partial sale of Ufinet (EUR220m capital gain) and NorthandCentral America (+178% YoY), which last year were negatively impacted by the polar vortex in Texas. The weak numbers in Italy (-3%) and Spain (-10%) come as a consequence of the poor hydro resource in the period and the long supply position, putting pressure on the integrated margins.
Ordinary NP +19% (also broadly in line with consensus)
The strong bottom line was supported by the sound operational performance, a decline in financial charges (-2%) and the decline in minorities (-31%) resulting from last year''s buyouts.
FY22 guidance re-affirmed
Enel confirmed FY22 EBITDA and NP guidance (EUR19-19.6, EUR5.6-5.8 respectively). Management also stated that ND/EBITDA is expected at around 3x by FY22 assuming the absorption of temporary WC deterioration in 1Q22 amounting to EUR3.6bn.
Remain positive, closely monitoring FCF generation though
Trading multiples (2023e EV/EBITDA 7.6x and 10.5x PE) look cheap while Enel is well-positioned to benefit from the attractive growth opportunities that will arise in the sector; thus, we reiterate our positive view on the name. This said, the ND figure has increased sharply (EUR13.2bn increase YoY, +29%) and needs to be closely monitored to make sure it will not jeopardise potential growth opportunities and challenge the valuation.