Enagas: I Don't Like The Hydrogen Focus

2025-04-03 10:30:00 ET

Summary

• Enagas faces reduced regulated revenues and a controversial hydrogen push, impacting its stock performance despite strong dividends keeping total returns around zero.
• In 2024, Enagas reported a slight revenue decrease and a 3.2% increase in net profit, with significant liquidity from asset sales and legal awards.
• The 2025-2030 strategic plan focuses heavily on hydrogen, with a €4.04B investment, but projected EBITDA growth and rising net debt raise concerns.
• I maintain a 'hold' rating due to the uncertain hydrogen strategy and potential dividend pressure, despite a small position in Enagas for its natural gas business.

Introduction

I used to like Enagas ( ENGGF ) ( ENGGY ) as the Spanish natural gas transmission company and LNG terminal operator owned a critical piece of infrastructure in the Spanish energy landscape. Unfortunately, the company has been plagued by reduced regulated revenues, and I’m not a big fan of its hydrogen push either. The share price has performer pretty poorly in the past few years, but the total return is still approximately zero thanks to the strong dividends. As the company has now published its 2025-2030 Strategic Outlook, this could be a good moment to have another look at this Spanish company. ...

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