Enel Enters Exclusive Negotiations With PPC To Sell Its Romanian Business; Shares Undervalued

We maintain our EUR 7.20 fair value estimate after no-moat Enel announced that it entered into exclusive negotiations with Greek utility PPC for the potential disposal of its Romanian business. Upon completion of due diligence to be carried out during the exclusivity period and ending at the end of January 2023, PPC's board of directors will determine whether it will submit a binding offer to Enel. Enel shares are undervalued after their rally, driven by the decrease in Italian government bond yields from their mid-October peak. However, we see more appealing earnings momentum in undervalued RWE and Engie.