MILAN, June 15 (Class Editori) — Total net investments of 8.6 billion euros (+700 million euros compared to 7.9 billion euros in the 2021-2027 plan), including net 4.5 billion euros for the Italian gas distribution network, 1.8 billion euros for ATEM tenders, 1.8 billion euros for Greece and 500 million euros for diversification (including 340 million euros, almost doubling the previous plan, for energy efficiency). These are the main points of the 2022-2028 plan presented today by Italgas. Equita SIM estimated a 4.2-billion-euro investment spending in Italy to 2028 compared to 5.2 billion euros in the 2021-2027 plan. While Barclays predicted a 5% increase in the investment plan for the next seven years to 8.3 billion euros from the previous 7.9 billion euros, of which 6.4 billion euros were destined to Italy and 1 billion euros to Greece.
2022 targets
For 2022, technical investments are expected to amount between 700 and 750 million euros and adjusted revenues above 1.4 billion euros, with adjusted EBITDA of 1.00 to 1.03 billion euros and adjusted EBIT between 570 and 590 million euros. These results do not consider the contribution of DEPA Infrastructure, a Greek gas network company for which Italgas signed a contract last December to purchase 100% for 733 million euros. Including the cost of acquiring DEPA Infrastructure and the impacts of IFRS 16, net debt at the end of 2022 is expected to amount to around 5.9 billion euros. With the completion of the tenders, thanks to the contribution of DEPA Infrastructure and the development of the energy efficiency business, the Group estimates revenues exceeding 2.6 billion euros by 2028 with an estimated EBITDA margin of around 70%, while leverage is expected to gradually reduce to around 61% at the end of the plan.
Financial efficiency and capital structure
Driven by the investment plan, the consolidated RAB of gas distribution, considering the acquisition in Greece, is expected to grow at an average annual rate of about 4.5% reaching 11.2 billion euros at the end of 2028. With the contribution of tenders, the consolidated RAB is estimated to be around 12.6 billion euros as of 2028 (+6.4% average annual rate). With the acquisition of DEPA Infrastructure, the Group estimates the debt to RAB ratio to be close to 65%. During the plan period, thanks to cash generation, this ratio is expected to return to around 61%, consistent with a solid investment grade area. Optimizing the financial structure will enable Italgas to support both the investment plan and shareholder remuneration. Italgas will continue to optimize its financial structure. In straight arch, the cost of debt is expected to remain below 1.2% on average due to the changed market environment.
Dividend policy
The current dividend policy has been confirmed: "It reflects Italgas' commitment to ensure attractive, growing and sustainable remuneration for shareholders," the company explained. The 2020-2023 policy announced in October 2020 includes the distribution of a dividend equal to the greater of the amount resulting from the 2019 dividend increased by 4% annually and the dividend equal to 65% of adjusted net income per share. The application of this policy for fiscal year 2021 resulted in the distribution of a dividend of 0.295, increased by 6.5% annually. At 2:30 p.m. the 2022-2028 plan will be presented to financial analysts and institutional investors.
CEO Gallo: “We are starting to expand our boundaries after 20 years”
"In a European scenario relying on the REPowerEU to strengthen the resilience of the energy system and accelerate the ecological transition, Italgas can reap the benefits of its vision that had identified digital, flexible and smart grids as the main enabler of the decarbonization of consumption. With 8.6 billion euros, growing compared to the investment program presented last year, the Group is confirmed as one of the main industrial entities capable of putting its planning, spending and value creation capabilities at the service of the country's and the EU's sustainable development goals. The largest share of investments is once again allocated to the extension, digital transformation and repurposing of the distribution network in order to create in time the conditions for the widespread use of new gases, such as biomethane, green hydrogen and synthetic methane, which we will soon have to accommodate in our networks in increasing quantities," the CEO, Paolo Gallo, commented, pointing out that "after twenty years we have goals outside national borders: this plan allocates 1.8 billion euros to Greece". The market is rewarding the plan with the stock rising by 1.86% to 5.48 euros at mid-session.
Analysts' first comments
Ahead of this afternoon's call, Intesa Sanpaolo's Research Department (targets of 6.2 euros and gold confirmed) stated that "the new plan confirms the strategic path in the gas distribution sector with Greece's assets offering more growth prospects this time than Italy. Our estimates to 2022 are at the lower end of the indicated range. We are waiting for more visibility from today's presentation". Equita SIM (hold and target price of 6.2 euros confirmed) pointed out that "Italgas plan allocates investments and acquisitions well above our estimates to 2028, namely 8.6 billion euros against the 6.9 billion euros we had estimated". According to Equita SIM, the plan "also includes higher investments in Greece, with 1.8 billion euros compared to the 1.6 billion euros we had estimated, and above all a contribution from tenders and M&A of 1.9 billion euros compared to the 1.2 billion euros we had estimated, with a conservative approach. In addition, the plan includes 500 million euros in investments between efficiency and water distribution, not included in our estimates. Guidance on EBITDA 2022 is higher than expected, precisely between 1-1.03 billion euros without DEPA, versus the 1 billion euros we had estimated, while capital expenditure at 750 million euros without DEPA is in line with our estimates. The dividend policy has not been changed and stops at 2023 with a minimum compound average annual coupon increase of 4% over 2019 or a payout of 65%".
(Source:Class Editori)
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