Deutsche Bank | Attractive draft regulatory framework. Forecasts have been revised significantly upwards; the recommendation is changed from ‘Sell’ to ‘Hold’, with a Target Price of between €12 and €16.30. Last close: €17.14.
James Brand: The Spanish regulator has published a draft of the new regulatory framework for Enagas (ENG). This will determine its revenues for the 2027–2032 period. The proposals are much better than both we and the market had expected. We believe this should translate into an increase in average revenues during the regulatory period of around €80 million per year, compared with 2026 levels, despite the fact that investment will be very limited.
Several aspects have exceeded expectations: 1) A key cost item has been increased from €170 million to €225 million, compared with expectations of an increase, at best, to €200 million; 2) Incentives for extending the useful life of assets have been strengthened, with an increase compared to previous expectations of around €20 million per year on average; 3) Recovery of the previous cost underrun, amounting to around €44 million per year; 4) New incentives worth around €5 million per year.
