27.11.2017

Zugemailt von / gefunden bei: RCB (BSN-Hinweis: Lauftext im Original des Aussenders, Titel (immer) und Bebilderung (oft) durch boerse-social.com aus dem Fotoarchiv von photaq.com)

RCB confirmed EVN at BUY, TP EUR 18.00 - Sufficient reserves make for still attractive valuation 

We raise our mid-term forecast for EVN by around EUR 25 mn on the bottom line and increase our target price to EUR 18 (EUR 15), supported by higher peer multiples and lower debt, while we confirm our BUY recommendation. Although EVN's FY 16/17e guidance increase to a record net result of around EUR 250 mn is also due to one-time effects, earlier impairments and provisioning make up for most of these and we expect the clean net result again to come in comfortably above the EUR 200 mn mark, just as it did in the last two years. Despite some regulatory downward adjustments, EVN should be able to stay above this level going forward as tapering out impairments and provisioning should allow EVN's divisions to show their basic earnings strength. Also, we believe that a >70% share of regulated and stable business in EBITDA justifies higher multiples, and our SOTP valuation underscores the value of EVN's divisions and its stakes in other Austrian energy companies, foremost Verbund , whose 21% share price increase since the beginning of July raised the value of EVN's stake in the company by EUR 0.87/EVN share.

Good mid-term earnings outlook: EVN's guidance upgrade for 2016/17e results not only referred to short-term valuation effects on the past business year's results, but highlighted cost savings, a strong position on the procurement front and in our view a first cautious step towards a new dividend level, which was set in stone at EUR 0.42/share for years, and will amount to EUR 0.47/share (incl. EUR 0.03 bonus DPS) for 2016/17e. At the same time, we reckon that EVN's power plants continue to have a strong position on the balancing market and while power prices have increased, retail prices are likely to follow suit as most competitors in Austria face similar or even weaker procurement conditions than EVN. Sure, upcoming changes in the regulatory return should cause a segment EBIT decline vs. the volume-driven, unusually high network result in 2016/17e, but recent tariff drafts and comments on a pre-tax WACC of 5.0-5.5% are in line with our earlier estimates. We raise our EBITDA estimates by 3-9% to EUR510mn for 2017/18e and EUR 529 mn for 2018/19e, which is slightly below adjusted 2016/17e levels due to network regulation effects next year. Key drivers include better market prices for electricity and balancing markets benefiting EVN's thermal and non-regulated units and a phase-out of provisioning for Walsum in 2018/19e making up for pressure on network results.

Outlook and recommendation: We keep our blended valuation approach, based on peer multiples, a sum-of-the-parts (SOTP) valuation, return ratios and a DCF model. Upside risks include a potential sewage plant and canal system order from Kuwait (total project value of EUR1.55 bn), where EVN's consortium was named best bidder, while energy demand, power prices and dark spreads account for the biggest downside risks. EVN is due to report FY2016/17e results on December 14, 2017.

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EVN

Verbund

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