The market has been too lenient on RWE's coal risk.
We are trimming our fair value estimate from EUR 20.30 to EUR 19.30 per share after a German court suspended RWE's allowance to clear the Hambach Forest to extend the operation of its biggest lignite mine. RWE's share price tumbled following the news release on Oct. 5, reflecting its coal risk, which the market has recently underestimated, in our view. However, after the sell-off, we believe the shares are now slightly undervalued. We reiterate our no-moat, stable trend ratings.On Oct. 5, the ...
RWE is an electricity and gas company. The Conventional Power Generation segment consists of the activities of RWE Power, Essent and RWE npower. The Supply/Distribution Networks Germany segment supplies electricity, gas and heat. The Supply Netherlands/Belgium segment comprises the activities of Essent in the Netherlands. The Supply United Kingdom segment comprises the operations of RWE npower. The Central Eastern and South Eastern European segment contains activities in the Czech Republic, Hungary, Poland, Slovakia, Turkey and Croatia. The Renewables, Upstream Gas & Oil and Trading/Gas Midstream segments include the activities of RWE Innogy, RWE Dea and RWE Supply & Trading, respectively.
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