Utilities (AO) | Hormuz ECG (and an update on RWE)

Research evidence excerpt

Utilities (AO) | Hormuz ECG (and an update on RWE)

Connecting the dots

Release date: 08 June 2026

Ingo Becker, CFA

Head of Utilities/Renewable Energy

+49 69 7569 6295

Utilities ibecker@keplercheuvreux.com

Europe

Hormuz ECG (and an update on RWE)

Key points:

The Strait of Hormuz remains blocked. Iran doesn't seem to see the need to agree to anything with the US (and Israel), yet. The

incompatible "mindset" (and, as a consequence, objectives) between the conflict parties continues to make a "good" deal (for all

aforementioned parties) difficult. European energy markets remain elevated - but only at the shorter tails of the forward price

spectrum; longer tail prices remain relatively close to pre-crisis levels.

For a while, equity markets seem to have decided that a solution will be found (in other words: "the long tail is right"). Reality

isn't confirming that, yet - and as long as this isn't the case, we expect improved results with arbitrage operations in the sector.

That said, individual stock prices tend to depict the overall market logic, too. While the crisis is likely to produce extra income for

arbitrage operators (we identified, e.g., RWE and Engie as crisis "sit on" stocks at the beginning of the war against Iran), that a)

hasn't been confirmed yet and/or b) isn't going to produce too much of a valuation effect if the crisis is resolvable, ie European

energy markets can normalise again.

We see some 20% upside for Engie (Buy) without crisis benefits, thus continue to consider it a "safe" crisis play. RWE (Hold) is

rigorously trading at around the mid-EUR50s, and thus in line with our cum-benefits EUR55 TP (we see the group at the upper end

of guidance in 2026E and 2027E). But even without benefits, the downside should be limited, also because of the "assurance"