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NATURGY: TO BE SPLIT TO CREATE VALUE (ANÁLISIS BANCO SABADELL)

To be split into two companies to create value. For now we maintain our SELL recommendation (potential -17%).
NTGY will simplify its business model by splitting into two large, listed energy groups, MarketsCo (liberalised activities) and NetworksCo (network activities), in order to be able to boost value creation (speeding up the implementation of the Strategic Plan, optimising cost of capital, leverage, dividend, M&A and ESG). We think the visibility on value creation will be medium term (no estimates by division have been given), and it may differ between the two NewCos. Furthermore, NTGY’s current share price would already be pricing in an optimistic scenario for asset rotation (at appealing multiples) and renewable energy development. The company would have to generate more than +30% of additional value in order for us to change our recommendation, which we see as unlikely at present, as it is trading at a premium to peers (22.3x P/E’22e vs. 15.8x Iberdrola and 12.2x Endesa).