REPSOL: AN UPBEAT BUT CAUTIOUS 2021-25 STRATEGIC PLAN (ANÁLISIS BANCO SABADELL)
2021-2025 Strategic Plan: optimistic in renewables but cautious in traditional businesses. BUY.REP’s plan shows unambitious numbers, with € 1.5 Bn of Net Profit’22 (vs. € 1.79 Bn BS(e) and € 1.75 Bn consensus) and between € 2.3 Bn and € 2.4 Bn in 2025 (vs. € 2.37 Bn BS(e) and € 2.27 Bn consensus) despite a bigger bet on renewables, as there has been a significant cut to the traditional business (refining margin). It cuts its dividend policy by -15%, with the DPS’20 totalling € 0.60/sh. (7.1% yield), and will buy back shares starting in January 2022 (50 M shares annually/additional yield of 3.3%). It will sell non-strategic Upstream assets (for an unspecified amount) as well as renewable assets (to a partner/IPO) totalling € 1.4 Bn EV (13% of NFD). We lower our EBIT and Net Profit estimates for the 2021-25 period by -15% and -13% on average due to refining, and our estimates stand -8%/-4% below the consensus. We also cut our T.P. by -8% to € 9.60/sh. (+14% upside). Since lows the stock has underperformed its sector by -8%.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
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