Gobierno Plan Will Eat UpTo 12% Of The Benefit Of Electricity Companies

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The large investment bank is already putting figures on the impact on the benefits of Spanish electricity companies from the shock plan to lower the price of electricity approved this Tuesday by the Government . JP Morgan and Morgan Stanley calculate a reduction in ebitda (gross profit) of around 5% for Iberdrola in 2021 and 2022 and of around 12% for Endesa.

The estimate distributed by the JP Morgan investment firm to its clients and to which the Economist has had access points to an impact on earnings of 1,100 million for Iberdrola between the remainder of the year and the first quarter of 2022 and of 1,000 million for Endesa in the same periods.

These figures represent a reduction of about 5% in Iberdrola’s ebitda for each year compared to the estimate prior to knowing the Government’s measures from the consensus of analysts gathered by Bloomberg, which reached 11,109 million for 2021 and 12,022 for 2022, in in line with the objectives of the company’s own strategic plan, from which it would now move away.

In the case of Endesa, the 1,000 million impact defended by JP Morgan experts represent a reduction of around 12.5% of the gross profit for each year, which previous expectations rose to 3,972 million euros in 2021 and at 4,009 million in 2022, slightly above the company’s goal of 4,000 million, which would also become obsolete.

For its part, in another report published this Tuesday, Morgan Stanley reduces the impact on Endesa’s ebitda to 6% in the next two years ; and in Iberdrola’s gross earnings, it leaves it at 3% for these same years.

Both the latter investment bank and JP Morgan anticipate a much lighter blow for Naturgy, whose market share in power generation in Spain is lower than its competitors, 10%, compared to 24% for Iberdrola and 19% of Endesa.

Beyond the numbers, the Citi team of experts issues a warning in another sense: “The measures of the Spanish Government to limit the increase in the electricity bill may structurally deteriorate the confidence of investors in the electricity sector.” “The blow is greater than the market expected,” they influence JP Morgan.

The ‘electric shock’ to the Ibex
Endesa shares have fallen by about 11% since Monday, while Iberdrola shares have lost 7.4%. From the highs of the year on the stock market for each of these companies, the decline is 18% and 21%, respectively.

This electrical discharge for the Ibex 35 “does not alter its technical situation beyond continuing with the weakness that the loss of supports such as 8,725 / 8,800 points warned last week,” says Joan Cabrero, an analyst at Ecotrader. In order for there to be any notable change in the consolidative situation of the European stock markets, he explains, the EuroStoxx 50 should lose key supports that it finds at 4,080 points . “As long as the current consolidation is not lost, it will not become a downward correction with the potential threat of seeing falls towards 3,800 / 3,900 points,” he clarifies.

Losses of 7,490 million
In the last two sessions of the stock market, Endesa, Iberdrola and Naturgy recorded losses in market capitalization valued at 7,490 euros .

The punishment of investors was especially harsh for Endesa, since in just 48 hours it left 2,435 million euros , more than 11% of its value. Its current capitalization, at the close of the session, is 20,550 million euros, which represents a loss of 5,0801 million since its highs for the year.

Iberdrola, the largest company in the sector, left 4,832 million euros in the last two days , 7.4% of its capitalization. Thus, it has lost 19,956 million since January 8, the day it reached its record levels. The lower punishment to Naturgy, which only left 223 million euros in this period, means that the former Gas Natural surpasses Endesa as the second listed company in the Spanish electricity sector.

However, the reviews of the recommendations that investment banks give to the main electricity companies still do not show any change. The analysis houses are waiting for formal details on the new measures . This is clarified by the Bank of America experts who, generally speaking, believe that “the impact is not as bad as it might have seemed when the first headlines were published first thing in the morning.”

Mediobanca analysts also pointed to the need to delve into the details, although the package of measures announced by the Government “is clearly negative for Endesa and Enel [the parent]”, as well as for Iberdrola and Naturgy, whose securities continue to receive advice. to keep in portfolio.

Barclays also see a particularly negative reaction in Endesa’s share prices. Meanwhile, Santander, despite advising to wait for things to calm down to enter the electricity companies, at current levels gives the firm Jose Bogas a clear buy recommendation.

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