A2A (AO) | Buy | No surprise from Q1 results, full-year guidance confirmed

Research evidence excerpt

A2A (AO) | Buy | No surprise from Q1 results, full-year guidance confirmed

cused on improving its sustainability Potential placement if the municipalities decide to sell (8%

footprint. stake not locked up by shareholder agreement).

Catalysts Net long exposure of volumes sold versus RES owned

Electrification of the consumption, also thanks to the generation. This imbalance increases the volatility of results

development of data centres in Italy. when there are shifts in power prices. Retail energy supply:

Higher capex (=growth) in electricity and district heating grids. operating margin squeeze due to energy commodity price

Acquisitions: A2A is a sector consolidator. volatility (for fixed-price contracts).

Key data charts

Price performance Sales split by region Sales split by division

SWOT analysis

Strengths Weaknesses

Top management track record. High quality of assets in its portfolio. Delays in organic project development due to authorisation process.

Diversified and balanced generation mix. Higher ROIC vs. peers. Net long exposure toward energy supply versus RES generation.

Growing customer base in wealthy Northern Italian regions. Complex group structure. Vertical integration needs to be increased.

Focused on sustainability: GHG emission cut, strong governance. Exposed to higher interest rates.

Opportunities Threats

Smart grid development: electricity network digitalisation. Lower returns, as the capex intensity (and inflation) might increase.

Visible growth in waste and regulated networks. New taxes on the generation business. Negative changes in regulation.

Higher value for CCGT thanks to energy supply to data centres. Paying excessive M&A mutiples, in particular outside Italy.

Value creation from disposal of minority stakes of non-core assets.