Bankinter: E.ON maintains guidance for the year and 2028 targets. Investments in networks will drive medium-term growth. Buy.
Key figures compared to consensus: Adjusted EBITDA €4,868m (-14%) versus €4,856m est; Adjusted EBITDA €1,754m (-24%) versus €1,790m est; Net Debt €40,829m versus €37,691m in December 2023. The management team reiterates 2024 guidance and 2028 targets.
Opinion of Bankinter’s analysis team: Results meet estimates and the management team reiterates the guidance for the year. The contribution to EBITDA of the networks division is reduced this year (-5%) due to the fact that last year it recorded non-recurring income from recoveries from previous years. The networks division accounts for 75% of the group’s total EBITDA. The marketing division reduced its EBITDA contribution (-29%) due to lower volumes and a more unfavourable pricing environment.
Following the results, the management team confirms the guidance for 2024. The guidance is for an EBITDA of between €8.8bn and €9bn, representing a fall of between -5% and -6%. In terms of EBITDA, this would be between €2.8bn and €2.9bn (between -5% and -9% versus. 2023).
The first half results put the group in a very comfortable position to comfortably meet these guidelines. It also reiterates the 2028 targets of the Strategic Plan, which envisages reaching €3,300m in 2028 with an annual EPS growth of +5%.
Our Buy recommendation is based on the following reasons: (i) Medium-term growth in the networks division thanks to the investments included in the Strategic Plan. The regulated asset base (RAB) will grow at an average annual rate of +10% in the period 2023-28; (ii) Visibility in results. The networks business is a regulated activity, which provides good visibility and low volatility in results; (iii) More favourable interest rate environment. The expected interest rate cuts by the ECB favours this type of companies, with high leverage and strong investments; (iv) Attractive valuation ratios, with a P/E over adjusted net attributable profit for 2024 of 11.6x and a dividend yield of 4.5%; (v) Attractive valuation ratios, with a P/E over adjusted net attributable profit for 2024 of 11.6x and a dividend yield of 4.5%.
