Enel: 8.2% Dividend Yield In 2023 #
Dec. 13, 2022 4:54 PM ETEnel SpA (ENLAY)ESOCF5 Comments
Summary #
- The 2022-2025 business plan confirms the dividend but will revolutionize Enel's investments.
- The company plans to exit countries without growth opportunities to refinance the debt and reinvest in core assets.
- We reaffirm and lower Enel's stock price; however, our rating remains a clear buy.
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After a few quarters, today we are back to comment about Enel (OTCPK:ENLAY). Here at the Lab, we still consider the company a once-in-a-decade opportunity, and we reaffirm our previous analysis reiterating our long-term positive view. In the meantime, the company released a Q3 update, but more importantly we are going to analyze the latest 2023-2025 strategy repositioning and Enel's latest debt evolution.
Starting with the latter and in line with what has already emerged in the half-year report, we were not surprised to see a significant increase in the group's net financial position in Q3 (Fig 1). This was impacted by 1) higher working capital requirements due to an increase in procurement costs for the high energy prices; 2) the exchange rate evolution that heavily impacted the foreign debt (as a memo, the dollar further appreciated by 5% in the quarter), 3) the effects of the Spanish tariff deficit which will only disappear in the next few months and 4) Enel's July dividend payment that was a €2 billion cash out. However, looking at the Q4, we expect a recovery in the working capital coupled with the company disposals, and so we see a €3 billion capital inflow. If we also consider the efficiency measures taken by management, we ended up with a financial position of -€64 billion versus the CEO's expectation of -€62 billion for 2022 (Fig 2).