Yet another positive week the one that the Italian big oil has just filed, supported byhe new bullish extension of oil which touched the new multi-year highs.
Eni reached its highest levels since February 2020, approaching the 12 euro threshold and with a + 40% YTD round. In the last month, the title of the Six-legged Dog has registered a growth of 12 percent and on average the consensus gathered by Bloomberg sees room for a further extension. The average target price indicated is in fact € 12.48 with potential upside of around 5%. Again, the consensus of analysts on Bloomberg indicates 51.6% of Buy and 38.7% Hold opinions on Eni, while 9.7% is positioned on Sell.
Eni on Thursday 7 October announced the start of the procedure for l” Ipo of the business that integrates the retail gas & power activities and those relating to renewables (Eni R&R). An operation in which the group led by Claudio Descalzi will maintain the majority stake in the new listed company and aims to complete the transaction in the course of 2022, based on market conditions. Details on the initiative, including the name of the new company, will be illustrated from the six-legged dog during the capital markets day on the calendar next November 22nd. “We aim to become a leader in the production and marketing of completely decarbonised products and this IPO is an important step towards the goal”, commented Eni’s CEO, Claudio Descalzi.
Three reasons why the listing can create value
Equita SIM, which has a rating buy and a target price of 13 euros on Eni, appreciates that the IPO has been considered the best solution to enhance the business and also believes that it can create value for three reasons: allowing the ‘acceleration of the energy transition process and related investments through debt relief; by listing a company that will have multiples significantly higher than those of Eni; and making the new company independent from an operational and financial point of view, which will be able to attract investors (debt and equity) excluded from companies exposed to oil & gas.
How much is the R&R IPO worth?
Intesa Sanpaolo experts believe that a valuation between 9 and 11 billion (estimated by MF) is conservative since competitors currently trade at around 10-15 times the ev / ebitda (source: Factset), depending on the market’s expectations on the earnings growth. The operation can certainly unlock hidden value, capturing the best ebitda / enterprise value multiples that the market assigns to renewable and retail companies.