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Utilities: Review of Q2-2018 earnings season: solid performances, after all
UtilitiesReview of Q2-2018 earnings season: solid performances, after all
EDF, Engie, Suez & Veolia have all posted rather solid H1-2018 metrics, after all. Transformation strategies, either organically (EDF, Veolia) or through assets rotation/acquisition (Engie, Suez), are starting to bear fruits and have helped offsetting identified headwinds. In some cases, uncertainties remain for H2 with in our view EDF’s and Suez’s investment cases still bearing the brunt of a lack of visibility. We would therefore still favour Engie (Buy, FV @ EUR15.5) and Veolia (Buy, FV @ EUR23.0) with strong fundamentals, attractive valuations and rather “comfortable†balance sheet situations. To be watched in H2-2018: 1/evolution of key macro (industrial production) and prices indicators (inflation, CO2 and electricity prices); 2/upcoming unveiling of the French Multi-Year Energy Programme; 3/Potential M&A newsflow, especially for Engie; and 4/governments’ “interventions†(energy price cap in the UK, privatization law in France, new Energy Minister to be appointed).
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Bryan Garnier
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
Pierre-Antoine Chazal
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