ESOCF - Enel: Not A Natural Deleveraging Play

2024-06-26 11:27:48 ET

Summary

• Enel SpA is pretty defensive, and its P/E is nice at 10x.
• The issue is that the economics of the regulated utilities business isn't great, and there are declines in rates coming in some of its concession geographies.
• Also, they aren't deleveraging because it's their business to continue to develop energy generation assets.
• It's quite a resilient play, although we expect peaking value from the regulated utility businesses, and it's not unattractive at 10x, we just don't see anything exceptional.

Enel SpA ( ESOCF ) saw solid results in Q1 , particularly on the back of better hydrology conditions in its Latin American businesses that are highly levered to hydropower. Other than that, the higher cost of capital environment is being compensated for in the network businesses through the indexed remuneration arrangements that they have in their respective geographies....

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