Bankinter | Despite a less favourable environment for gas and electricity prices, Naturgy has been able to maintain its H1 results at a similar level to last year thanks to the better contribution of the regulated network activity, new investments in renewables and the improvement of the marketing margin.
For the full year, the management team expects to achieve an EBITDA of over €5.3bn and a Net Profit Restated of over €1.8bn. Until now, the management team had not given guidance for the year, citing the volatile backdrop of the energy markets. This guidance improves on consensus estimates of EBITDA below €5,000m and a Net Profit Restated of €1,700m. Following the failure of negotiations with TAQA, Criteria has reiterated its commitment as a long-term investor in the group.
Criteria seeks to reorganise the group’s shareholding to resolve several fronts at the same time: (i) defuse the tense situation with IFM; (ii) remove GIP and CVC; (iii) shield the group’s Spanish nature; and (iv) increase the scarce free float. Shareholder stability and increasing the free-float are key to improving investor sentiment. The management team has announced that it will publish a new Strategic Plan before the end of the year. The elaboration of the Strategic Plan will allow for a better perception and valuation of the group.
We maintain our buy recommendation based on: (i) Favourable evolution of the networks and renewables divisions; (ii) Recovery of energy prices; (iii) Attractive valuation PER 2024 est. of 11.8x and (iv) High dividend yield: 6.2% with a floor dividend of €1.40/share.
