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Keeping up with the energy transition with the largest Italian utility

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Keeping up with the energy transition with the largest Italian utility

The quarterly results of Enel further confirm the solidity of the integrated business model. The group has made significant progress in executing the repositioning plan and in disposing of non-core assets, exceeding half of the 21 billion target set by the 2023-2025 Strategic Plan. The broad visibility on the continuation of the year made it possible to confirm the 2023 guidance on Ebitda, net income and debt.

In the first quarter +1.9% profit, 2023 guidance confirmed

In the first quarter of the year, Enel recorded growth in ordinary Ebitda to 5.5 billion euros (+21.8%) and in ordinary net profit to 1.5 billion euros (+1.9%). Revenues amounted to 26.41 billion euros (34.13 billion in the first quarter of 2022, -22.6%), with a decrease compared to last year “mainly attributable to a progressive drop in energy prices following of the normalization of the energy context”. This was announced by the energy group, indicating that net debt fell to 58.9 billion euros (-1.9%).

“The excellent results achieved by Enel in the first quarter of 2023 further confirm the solidity of our integrated business model which has allowed the Group to successfully face a highly challenging start to the decade” said Enel’s CEO, Francesco Starace, specifying that “half of the 21 billion euro divestment target announced” in the presentation of the 2023-2025 Strategic Plan has already been exceeded. Based on the “excellent operating and financial performance in the quarter” Starace confirmed “the guidance for 2023 on ordinary EBITDA (20.4-21 bn), ordinary net income (6.1-6.3 bn) and net debt” .

Plan targets to 2025, dividend rises to 0.43 euro

Based on what is reported in the 2023-2025 Strategic Plan, Enel expects the group’s ordinary Ebitda to grow to a value between 22.2 billion euros and 22.8 billion euros in 2025, with a CAGR of 4- 6%. Enel expects the Group’s Net ordinary income to increase to 7-7.2 billion euros in 2025, with a CAGR of 10-13%. The group confirms a simple and predictable dividend policy, with a DPS of €0.43 in the period 2023-2025, up from €0.40 in 2022; the DPS in 2024 and 2025 is to be considered as a sustainable minimum.

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Enel expects the actions outlined in the Strategic Plan to have an impact immediately visible positive on the group’s net debta significant reduction of which is expected in a range of 51-52 billion euros by the end of 2023. As a result, Enel expects the net debt/Ebitda ratio to decrease from the value of 3-3.3 times estimated in 2022 to 2.4-2.5 times in 2023, to then remain stable in the remaining period of the Plan.

Cash Collect with attractive short-term returns

An alternative way of investing in the mentioned security is to use investment certificates, such as i Memory Cash Collect no Autocall recently issued by BNP Paribas on the SeDeX of Borsa Italiana. This range completes the Cash Collect offer of the French issuer, until now more concentrated on baskets of shares rather than on a single underlying which can be a European or American security.

The new Certifiers allow you to gain exposure to individual companies and enjoy the opportunity to receive rewards on a monthly basis, thanks to the fact that there is no possibility of early recall of the certificate in the intermediate evaluation dates. This aspect, combined with the 12-month time horizon, makes these products particularly suitable for investors looking for attractive short-term potential returns.

Annual return of 6.72% for the Certificate on Enel

Within the new range of Memory Cash Collect no Autocall we find the Certificate (ISIN NLBNPIT1PKH3) on Enel shares. The product offers a monthly premium with a memory effect of 0.56 euros (equal to 6.72% per year). To collect the coupon, it is sufficient for Enel to be at or above the premium barrierset at 70% of the initial value of the underlying.

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In particular, starting from the month of July, thememory effect which on each monthly valuation date allows the investor to receive any premiums not collected on the previous dates. During the various observation dates, in fact, the premiums are paid if the underlying is above the Barrier level. Otherwise it will be put “in memory”. Subsequently, in the event that the underlying goes back to subsequent observation dates, the investor will receive the premium including all previously unpaid memory premiums.

The Certificate stands out for being a product not Autocall: this means that on the intermediate observation dates, the certificate does not expire, regardless of the performance of the underlying. Furthermore, these Certificates have a shorter maturity (one year) than the average Cash Collect (two to three years).

At maturity (May 15, 2024), two possible scenarios arise: if the Enel share is quoted at a level higher than or equal to the barrier at maturity (70% of the initial value), the Certificate pays the notional amount (100 euros) added to the premium plus any previously unpaid coupons. Otherwise, the product pays an amount commensurate with the security’s performance (lower than the barrier at maturity), resulting in a loss on invested capital.

Almost 90% of analysts recommend the purchase

At Piazza Affari, the Enel stock performed very well in this first part of 2022, reaching a new relative high of 6.257 euros. The balance since the beginning of the year remains decidedly negative with over +18% compared to the approximately +12% of the Ftse Mib (data as at 1 June 2023).

More generally, it was from the low of 13 October last at 3.956 euros that the substantial recovery started, dictated by the positive sentiment of the markets in general and by the about-turn of yields compared to the annual peaks. The rebound did earn the title almost 50% to date.

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Among analysts there is one clear prevalence of positive reviews on Enel shares, with 88.9% of those monitored by Bloomberg having a purchase recommendation (buy), 7.4% saying hold (keep the shares in their portfolio) and only 3.7% recommending selling (sell). The average target price indicated is 7.24 euros, approximately 22% above the levels at which Enel is stationed in Piazza Affari.

Every Tuesday, “The opportunities on the stock market” is available, the weekly newsletter dedicated to financial advisors and stock market experts. To read the latest issue, visit the link: https://investimenti.bnpparibas.it/news-e-formazione/le-opportunita-in-borsa/


This publication has been prepared by T-Finance business unit of T-Mediahouse Srl (the Publisher), with registered office in Viale Sarca, 336 (building sixteen), 20126, Milan, in complete autonomy and therefore exclusively reflects the opinions and Editor’s ratings. The information and opinions contained in this publication have been obtained or extracted from sources believed by the Publisher to be reliable; however, the Publisher makes no representations or warranties as to their accuracy, adequacy or completeness. BNP Paribas and the companies of the BNP Paribas group assume no responsibility for its content. Scenarios, calculation assumptions, data and past performance, estimated prices, examples of potential revenues or evaluations are for illustrative/informative purposes only, with no guarantee that such scenarios or potential revenues will occur or be achieved. In any case, the Publisher is not responsible for any loss or damage, direct or indirect, which may arise from the use of the contents of this publication.

For information on T-Finance business unit of T-Mediahouse Srl, as producer of the recommendations, on the presentation of the recommendations and on the positions and conflicts of interest of the producer, please click on this link.

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