EUR 200.00 For Business Accounts Only

NATURGY: DIVESTITURE IN CHILE (ANÁLISIS BANCO SABADELL)

The company has announced the sale of its 96% stake in its electricity networks subsidiary in Chile, CGE, to State Grid International Development Limited (SGID) for € 2.57 Bn equity/€ 4.31 Bn EV, with capital losses before taxes totalling €~400 M. NTGY expects to complete the transaction before late February 21, after which the company will update its Strategic Plan in the CMD. NTGY has stated that its NFD pro forma would total € 10.8 Bn after the transaction (€ 3.9 Bn less than on 30 September due to the deconsolidation of CGE’s debt), with the NFD/EBITDA ratio of the last 12 months going from 3.6x o 2.9x.
MARKET IMPACT
Positive news, as it means a ratio of 14.8x EV/EBITDA’20e according to our estimates vs. our valuation of 12.8x, and thus the extra EV generated would be € 861 M or € 0.89/sh., meaning a +5% increase in our valuation (similar to the rise today on the stock market). We also welcome the reduction to debt, which would go from 4x NFD/EBITDA’20e to 3x (vs. NTGY’s estimate of 2.9x). We downplay the capital loss on the P&L statement that will be accounted in 2021 and will represent ~40% of Net Profit. As this is a non-cash impact, we do not expect it to affect the expected DPS’21 of € 1.50/sh. (+5% vs. 2020/ in line with the consensus/ 7.7% yield).
In our view, if NTGY continues with its asset-sale policy in LatAm, the next assets to be sold might be Gas Distribution and Commercialisation Chile (7% EV, which we value at € 2.46 Bn/13x EBITDA) or Gas Distribution Mexico (6% EV), which we value at € 1.95 Bn/11.4x. In our play we do not include the assets in Argentina (valued close to zero), Brazil (€ 994 M EV/ 7x EBITDA) and Panama (€ 1.03 Bn/ 7.5x EBITDA) as these assets are not relevant.