EUR 200.00 For Business Accounts Only

ENDESA: 2022-24 STRATEGIC PLAN (ANÁLISIS BANCO SABADELL)

The company has presented its 2022-24 Strategic Plan, where in targets ELE keeps its EBITDA’21 target unchanged at € 4 Bn (vs. € 3.99 Bn BS(e) after fine-tuning our estimates in this report and vs. € 3.86 Bn consensus), and its EBITDA’22 target at € 4.1 Bn (vs. € 3.90 Bn BS(e) and € 3.96 Bn consensus), whereas it raises its EBITDA’23 target to € 4.5 Bn (vs. € 4.3 Bn previously), which would stand above our estimate of € 4.17 Bn (which we raise by +7% in this report) and that of the consensus (€ 4.21 Bn), setting an EBITDA’24 target of € 4.7 Bn that would also stand above our revised estimate of € 4.36 Bn (also raised by +11% vs. previously in this report) and the consensus € 4.26 Bn estimate.
We revise our EBITDA estimates, currently in line with those of the consensus and below ELE’s by -6% on average over the 2022-24 period. We keep EBITDA’22 at € 3.896 Bn (-5% vs. ELE’s target and -2% vs. consensus), as we assume the CO2 dividend adjustment (as opposed to ELE) and where we believe that margins will remain under pressure in the first half of the year given the environment of high pool prices. We raise our EBITDA estimates’23-24 up to € 4.169 Bn and € 4.359 Bn (+7% and +11% vs. previous levels), still standing -7% below ELE’s for both years.
We also raise our CAPEX estimates’22-33 (+9% and +22%, respectively vs. our previous figures), especially in the renewables division, partially assuming the scenario of high raw material prices/supply problems. With this revision, our estimates would be very much in line with ELE’s € 7.5 Bn target. On another note, we raise NFD’21 up to € 9.59 Bn (+39% vs. 2020), based on the new expectations made public by ELE, forecasting a € +2.601 Bn increase with € 10.7 Bn of NFD’24 (in line with our estimates). This increase in NFD is explained by a working capital deterioration due to headings not collected as a result of the regulatory changes implemented over the last few months.
In addition to fine-tuning our estimates and rolling over our model, we price into our valuation the optionality of the renewables pipeline, where we assume 7 GW adjusted for risk through 2030 (70% probability), which adds +3.9% to our valuation. The rise in NFD’21e and the aforementioned increase in CAPEX is higher than the operating improvement incorporated, and thus we cut our T.P. to € 23.70/sh. (-9% vs. previously; +20% upside). By businesses, EV rises slightly in Generation and Commercialisation to 40% (vs. 39% previously) in view of the expected increase in renewables.