Snam Offers Steady Earnings and Dividend Growth

Snam has three regulated segments: transportation, storage, and regasification/liquefied natural gas. The transportation segment, largely natural gas pipelines, contributes 80% of group EBIT. Storage contributes 20%, and regasification is only a marginal contributor. While these regulated assets benefit from efficient scale, we assign a no moat rating to Snam as regulation limits pretax allowed returns to ensure low prices for customers. For 2025, the regulator has decided to cut allowed returns by 40 basis points for transportation to 5.5%, 50 basis points for storage to 6.1%, and 50 basis points for regasification to 6.2%, amid a lower interest rate scenario.