No-Moat Snam to See Higher Allowed Returns in 2024; Initiating With EUR 4.70 Fair Value Estimate
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 keep prices low for customers.