ENEL (AO) | Buy | CEO Flavio Cattaneo pushes on RES

Research evidence excerpt

ENEL (AO) | Buy | CEO Flavio Cattaneo pushes on RES

The stock trades at a discount to European peers. Its strong each country. Sao Paulo concession renewal (in 2028).

development in networks is not priced in. While the decarbonisation process will lead to an increase in

Catalysts operating margins, cost inflation and government regulatory

New business plan provides for higher EPS growth and intervention in the power market design (for RES) could reduce

shareholder remuneration. the expected returns.

Re-levarage via acquisitions, capex acceleration in Volatility in retail business due to competition and commodity

RES/networks. risks. Ineffective efficiency and cost-cutting plan.

Refocus on Europe/USA to reduce regulatory/currency risk

Key data charts

Price performance Sales split by region Sales split by division

SWOT analysis

Strengths Weaknesses

Worldwide diversification reduces operational risk. Devaluation of LatAm currencies (mainly BRL and CLP) and USD.

Large exposure in electricity distribution in Italy, Spain and LatAm. Complex organisation, in particular in LatAm. A reshaping is ongoing.

Both organic and via acqusition growth in renewables in Europe/USA. Long customer volumes in energy supply versus generation.

Some 90% of 2028E EBITDA to be contracted/regulated. Short-term strategy compared with the long-term view provided by peers

Opportunities Threats

Bolt-on acquisitions, capex acceleration in electricity networks. Unfavourable regulatory changes in networks and in RES market design.

Increase in shareholders' remuneration via higher DPS and SBB. Higher interest rates and cost of debt (c. 85% at fixed/hedged rates)

Up to EUR15bn of releveraging room (2.5x net debt/EBITDA in 2025). New taxes on generation business in the group's core countries.