Engie Raises 2022 Guidance Above Expectations After a Very Strong Q3; Shares Cheap

We maintain our EUR 17.5 fair value estimate after no-moat Engie released strong third-quarter results and raised its 2022 guidance above expectations. This print confirms our view that Engie is one of the main beneficiaries of skyrocketing power prices and expanding clean spark spreads among European utilities thanks to its hydro and nuclear plants and its large fleet of CCGTs. Engie maintains its dividend policy based on a 65%-75% payout. The low end of it involves a 2022 dividend of EUR 1.4 and a 10.5% yield. Shares are undervalued.