Renta 4 | Focuses on growth in Spain and Europe, with assets in Latin America (total equity R4e €602 million) likely to be divested in the short/medium term, as they are considered non-strategic. Long-term growth opportunity lies in the development of the European hydrogen market: 1) Spanish trunk network (investment of €2.65 billion, regulated business, 20% subsidy), and 2) international interconnections (€330 million, with France unregulated with no volume risk and with Portugal regulated, 40% subsidy). There are three areas of uncertainty which, as they are resolved, could act as catalysts: 1) TGP arbitration, which is expected to be resolved in the coming months (repatriation of dividends, possible subsequent divestment); 2) regulation in Spain for gas networks, we assume an improvement in regulated remuneration, Renta 4 estimate 6.5% versus 5.44% currently, as well as the adjustment of unit opex to real value; and 3) hydrogen regulation, pending transposition by the regulator of European regulations, as well as FIDs (final investment decisions) by producers. At present, no changes are expected in the dividend policy until 2026 (€1/share). Thereafter, we believe that the balance sheet has room to maintain it at current levels without damaging the rating (key factors will be divestments, leverage and regulation).
Looking ahead to 2026, we expect regulated revenues to continue to decline, thereby affecting EBITDA performance, where we do not expect any major changes in the results obtained from subsidiaries. Net debt is expected to fall to around €2.3 billion.
Looking ahead to 2030, the company estimates EBITDA growth of 2.5% CAGR from 2024 (9.5% from 2026), assuming a TRF for the gas business of 6.5% (in line with our outlook) and 8% together with the remuneration for work in progress, for hydrogen (factors that would allow an IRR in this business of around 6.5%-7%, in line with other regulated businesses).
Conclusion: OVERWEIGHT, TP €17.95/share (previously €17.88).
With no major changes to our estimates, we have slightly adjusted our target price. This target price continues to offer significant potential, excluding the hydrogen business pending greater visibility (we estimate that it represents an additional €5 per share).
