Redeia Earnings: Management Reiterates Guidance; Shares Undervalued

We maintain our EUR 16.50 fair value estimate after no-moat Redeia RED released first-half results that were in line with FactSet consensus. Redeia largely confirmed its 2023 targets, aiming for transmission investments above EUR 700 million, EBITDA above EUR 1.5 billion, and net profit in line with 2022. Shares appear undervalued.

The first-half top line grew by 3% to EUR 1.06 billion, mostly thanks to growth in the diversification businesses. The international business segment grew 21% after the commissioning of concession lines in Chile and Peru and the satellite business revenue increased 24%, mainly due to the incorporation of Axess. EBITDA increased by 1% to EUR 0.8 billion as top-line growth was mitigated by a decreasing satellite business related to the completion of certain video services in Brazil. Net profit fell 2% to EUR 0.35 billion as increased minority interest from the sales of a 49% stake in Reintel weighed on earnings.

Net debt was EUR 4.43 billion at the end of June, EUR 300 million below year-end 2022 thanks to the EUR 0.5 billion issuance of a hybrid green bond.