Analysts Changes in Hera consensus

Transcription

1 IR Utility IR contacts Analysts Changes in Hera consensus This interactive tool gives a quick access to the changes of analyst opinions highlighted in their studies. Full reports cannot be disclosed due to broker policies but here you can find Key messages of all new issued broker s reports. This tool is updated on a monthly basis by Investor relations Department January January January January January January January February February February February February February February March March March (1) March (1) March March March April April March (2) March (2) April April April May May April April May May May June June May (1) May June June June July July May (2) June July July July August August June July (1) August August August September (1) September (2) October November September July July (2) September September September October August August (1) October October October November (1) November (2) September August (2) November November November October September December December December December December November (1) October (1) November (2) October (2) December November (1) Related contents Hera public available reports November (2) December

2 TP 2.60, 2008 results expected in line with estimates TP 2.00 (from 2.30 ), outperform (from neutral ) high proportion of regulated activities (63%), expected strong CF and limited risk on the current BP TP 1.80 (da 1.90 ), outperform (from neutral ) regulatory risks for Hera are fairly contained solid financial structure Change Consensus in January 2009 Banca Leonardo CAI Cheuvreux Cazenove Citigroup Dresdner Kleinwort Exane Reduce Merrill Lynch Santander Unicredit Target Price Consensus as at 31/01/ TP 2.56, Enìa s Chairman stated that he hopes that Hera will reconsider joining the Iride- Enìa merger project TP 2.80, illegal State aids: Hera should have to pay 15m more relative to Meta TP 2.00, (initial coverage) a rare combination of growth and defensiveness an unjustified discount to peers

3 Change Consensus in February 2009 TP 2.56, Hera might take into consideration new M&A after the shareholding pact meeting TP 2.93, New M&A are upcoming? TP 2.00, Hera among Italian best picks Banca Leonardo CAI Cheuvreux Cazenove Citigroup Dresdner Kleinwort Exane Reduce Merrill Lynch Santander Unicredit Target Price Consensus 27/02/ TP 2.80, Rumors on possible M&A with Linea Group TP 3.50, TP 2.80, Expecting double digit growth of Ebitda and EPS

4 TP 2.56, Despite the macroeconomic scenario, Hera substantially confirmed the target. Operating in regulated business, Hera should be more protected from the crisis. TP 2,00, outperform Strategic pillars: upstream integration, positive FCF, sound financial structure, generous dividend policy. TP 2.15, Improved visibility on the Ebitda target thanks to the more conservative assumptions on GC and to the new WTE plants. Change Consensus in March 2009 Banca Leonardo CAI Cheuvreux Citigroup Dresdner Kleinwort Merrill Lynch Santander Unicredit Undervalued Reduce Target Price Consensus 31/03/ TP 2.80, TP 2.10, Hera presents a limited downside risk of the regulated businesses. Hera is the only one Italian local utility without governance problems. TP 1.85, undervalued Higher visibility for earnings until 2011 as a consequence of tariff increases and of the plants completion. Expected positive FCF in TP 1.80, outperform Realistic Ebitda target. Good results at operating level. TP 2.00, A rare combination of growth and defensiveness. TP 3.50,

5 Change Consensus in April 2009 TP 2.06 (from 2,56), High Ebitda visibility, balanced asset portfolio, low impact on P&L from the current negative macroeconomic scenario. TP 2.15 (from 2,60 ), Visibility on new BP targets is quite good; the share is trading at interesting multiples. TP 2.35 (from 2,80), Solid organic growth, further opportunities for new bolt-on acquisitions, the stock remains mostly defensive, FCF generation and leverage reduction. Banca Leonardo CAI Cheuvreux Citigroup Dresdner Kleinwort Merrill Lynch Santander Unicredit TP 2.00, Hera s strategy based both on internal and external growth has proved to be the most successful. Undervalued Reduce Target Price Consensus 30/04/ TP 2.10, Safe strategy, with 60% of Ebitda regulated with tariffs set until 2011/2012. Good 1Q2009 results expected and positive catalysts ahead. TP 1.85, undervalued - best picks Higher earnings visibility for until 2011 thanks to the tariff increase and the completion of 80% of plants. TP 1.85, (from reduce ) Low-risk business model, a clear strategic approach and the sound earnings profile driving FCF positive

6 Change Consensus in May 2009 TP 2.06, Q results were overall in line with forecasts, confirming the expected growth. TP 1.65, neutral Strong management, increasing CF generation, stable business mix, safe dividend payments. TP 2.35, Strong Q1 results which we see as indicating the resilience of Hera s business in the current economic downturn. Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit TP 2.33, Q1 results came definitely in line, without major differences across single divisions Ebitda. Low risk free rate & cost of debt. Undervalued Target Price Consensus 29/05/ TP 2.00, Q1 results came slightly above our expectations; limited downside risk of the regulated sbu; Hera is the only Italian utility without governance problems. TP 1.85, undervalued Q1 results confirm that Hera remains a sound growth story, also thanks to a well diversified business mix and a massive capex plan.

7 Change Consensus in June 2009 TP 2.3 (from 2.0), best picks Cautious business plan assumptions; lack of governance issues; accomplished investment program. Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Undervalued Target Price Consensus 30/06/ TP 2.0 We remain convinced that Hera s strategy, based both on internal and external growth (via small and medium sized acquisitions) has proved to be the most successful until now.

8 TP 2.06, High cash flow visibility from regulated business combined with Ebitda growth potential from WTE business; long-term M&A speculative appeal. TP 2.07, (from 2.15 ), TP 1.75, (from 1.65), neutral Strong management, increasing cash flow generation, a fairly stable business mix, a manageable refinancing calendar and safe dividend payments. Change Consensus in July 2009 Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit TP 2.0, Target Price Consensus 31/07/ Hera s strategy, based both on internal and external growth (via small and medium sized acquisitions) has proved to be very successful until now. TP 2.3, We reiterate a positive valuation on Hera thanks to its safe strategy, the weight of regulated activities, the lacking of governance problems and the role in the Italian growing waste business. TP 2.0, outperform The company has a strong track record for successfully pursuing and securing small size acquisitions and we still see this as a potential source of growth in the future. TP 1.85, (from undervalued ) We valuate positive a M&A strategy based on acquisitions of small and medium size at reasonable prices and also in light its appealing valuation in relative terms compared to its Italian peers.

9 TP 2.06, Overall, we view 2Q and 1H results as positive if we consider the difficult environment, in particular in the special waste activities. TP 2.04 (from 2.07), TP 1.75, underperform (from neutral ) We continue to like Hera based on factors such as its strong management, increasing CF generation and stable business mix. Change Consensus in August 2009 TP 2.80, Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Under Review Underperform TP 2.3, We confirm our rating and TP in view of the +30% potential upside and the limited downside risk of the regulated businesses. TP 2.0, outperform Positive stance confirmed. Hera is delivering solid organic growth even in a though environment and it should benefit from a potential recovery of industrial volumes going forward. TP 1.87, neutral TP 1.92 (from 1.77), H1 results confirmed the defensive nature and the resilience of Hera s business portfolio which offers a good mix between defensive and growing businesses. TP 2.26 (from 2.33), Target Price Consensus 31/08/ TP 2.0, H results should prove the company s business portfolio defensiveness. All without renouncing to growth via new plants and tariff renegotiations. TP 2.35, H1 confirmed the resilience of Hera s business model; EE and Gas business remained the two key drivers of growth. TP and rating under review (from 1.85, ) 2Q 2009 results confirmed the Group s earnings growth even in a tough economic environment.

10 Change Consensus in September 2009 Post Business Plan TP 2.0 (from 2.06), add (from ) The new BP targets are realistic, supported by a strong increase in commercial activities, tariff increases in regulated activities, cost savings and new plants contribution. TP 2.0 (from 2.04), Aggressive 2013 Ebitda target, but thanks to a robust capex plan; Hera remains an attractive player in the Waste market. TP 1.75, underperform Solid and credible new business plan; strong growth in Gas and Waste businesses. TP 2.33 (from 2.26), Sound industrial plan fuelled by Gas and WTE divisions. TP 2.3 (from 2.8), Sound growth,transparent and reachable targets. Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit TP 2.0, TP 2.1 (from 2.3), We like Hera s business model, the downside risk of regulates businesses and the lack of governance problems. Add Underperform Underperform Target Price Consensus 29/09/ Business Plan not surprising but credible: the BP confirms Hera s equity story which is grounded in combination of growth and defensiveness. TP 1.8 (from 2.0), underperf. (from outperform ) Growth drivers are robust: new plants, synergies and org. growth. TP 1.75 (from 1.85), hold (from ) Challenging business plan on Energy sectors; the key growth s drivers are Waste and Energy. TP 2.00 (from 1.92), Consistent mid-term growth targets relying on visible expansion projects. TP 2.00 (from 1.87), outperform (from neutral ) Business Plan: transparent and sustainable growth.

11 Change Consensus in September 2009 Reports related to Tax Moratorium TP 2.0, add The expected impact of the new moratoria fiscale issue is lower than for other local utilities (around 1.3% in terms of market cap). TP 2.0 (from 2.10), The tax moratorium impact should be for Hera -23 ml, as we expected, with a negligible impact on our valuation and no risk for the 2009 dividends. TP 2.0, Hera would have been the less impacted in the sector by the measure; the estimated amount to be paid by Hera represents a mere 1.3% of current market cap. Add Banca Leonardo CAI Cheuvreux Underperform Underperform Merrill Lynch Santander Unicredit Target Price Consensus 30/09/ TP 1.8 underperform Hera should be involved only marginally. TP 1.75, hold Unexpected charges on 23 ml for the tax moratorium; we believe the company could distribute a 2009 DPS in line with the previous year, even in a worst case scenario. TP 1.99 (from 2.01 ), In our view the impact should be quite limited or around 20 ml ; also dividend will be probably increased in 2009 as we expected.

12 Change Consensus in October 2009 TP 2.0, add TP 2.1, We expect positive results, mainly thanks to the Sat and Megas contribution and to the WTE plants of Ferrara and Forlì. TP 1.75, neutral (from underp. ) We continue to like Hera due to factors such as strong management and increasing cash flow generation, and one of the safest dividend in the sector. TP 1.98 (from 2.0), outperf. We expect an overall positive set of results well supported by growing volumes of electricity sold to final users, improved marginality on gas and well protected against the ongoing crisis by the resiliency of regulated activities. TP 2.3, The acquisition of 25% of Aimag represents an important step for Hera in order to reach its target and improve its geographical fit. Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit TP 2.33, Add Underperform Target Price Consensus 30/10/ We expect Q3 good performance, enhancing overall visibility on FY targets. TP 1.75, hold As a result of the tax moratorium, Hera should offer the highest dividend yield in the sector related to TP 2.00 (from 1.99 ), TP 2.00, Shareholders approved share capital increase to fund networks acquisition: the deal is EPSneutral in 2009 end enables to strenghten the group s asset base and to improve its competitive advantage in view of the expected auctions for the gas distribution concessions. TP 2.0, top picks

13 Change Consensus in November 2009 TP 2.3, 9M 09 results: double digit growth confirmed. TP 2.0, add Results were better than our forecast. TP 2.1, best picks All confirmed after good 3Q09 results. TP 1.8, outperform (from underperform ) Hera reported Q3 operating results above our estimates mainly due to a positive one-off of 15 ml. Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit TP 2.39 (from 2.33), Add Target Price Consensus 30/11/ With a 50% potential upside, proven business model resilience, very modest impact from fiscal moratorium repayment, and still distant and undefined effects from possible early termination of waste-water concessions, we believe Hera currently offers remarkable risk-return profile. TP 1.75, hold Hera reported 3Q09 results well above our estimates. TP 1.95 (from 2.0), TP 2.00, Q3 performance confirmed good portfolio resilience thanks to the rewards of the group s investment strategy and efficiency actions. TP 2.0, top picks 9M09 results support our positive stance.

14 Change Consensus in December 2009 TP 2.0 (from 2.35), The risks to our target price are 1) unexpected change in the regulatory environment; 2) unexpected changes to renewable legislation in Italy, in particular referred to the treatment of WTE; 3) unexpected commodity pressures; 4) unexpected fall in gas and electricity demand due to mild weather conditions. Add Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Target Price Consensus 31/12/ TP 1.95, TP 2.00, With the acquired networks, Hera further enhances its competitive advantage in its service area in view of the expected auctions for the gas distribution concessions set to expire in

15 Change Consensus in January 2010 TP 2.1, We consider Hera the one of the very few Italian local utilities without governance problems. TP 2.0 (from 1.8), The consolidation of smaller companies located nearby could also fuel growth in the future. In addition, Hera is a leader in the Waste business and has a proven ability to build and run WTE. Therefore, it could play a relevant role in developing new projects in JVs with local partners outside its region. Given the shortage of WTE capacity in Italy and the high profitability of this business, we view it as a promising development. TP 1.75, hold Add Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Target Price Consensus 31/01/ TP 1.95, TP 2.0, Even in a year as problematic as the 2009 we just witnessed, Hera s smart growth strategy is paying off. The exposure to weak wholesale power market fundamentals is limited and the business portfolio is wellbalanced. Further consolidation opportunities are on the radar. TP 2.0, top picks In the current uncertain economic scenario, Hera s business portfolio has proved to be very defensive due to its significant exposure to regulated and semi-regulated businesses, while still delivering growth via new plants, synergies and tariff increases.

16 Change Consensus in February 2010 TP 2.1, TP 2,0, We continue to believe that Hera will confirm its strategy, based both on internal and external growth via small and medium sized acquisitions that has proved to be very successful until now. Add Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Target Price Consensus 26/02/ TP 2.0, Hera used to be the M&A play among the Italian municipal utilities, thanks to its geographical position and track record in integration. With M&A slowing down, we believe the next theme for the company will be exposure to economic recovery.

17 Change Consensus in March 2010 TP 2.1, Hera s 4Q2009 operating results were above our estimates. TP 1.75, hold 4Q2009 results broadly in line with our estimates. TP 1.75 neutral 4Q2009 results in line at operating level. We continue to like Hera based on factors such as strong management, increasing cashflow generation. Add Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Target Price Consensus 31/03/ TP 2.0, add 2009 results were almost in line with our forecasts in terms of Ebitda, but lower than expected in terms of Ebit and Net income. TP 2.0, outperform Ebitda 2009 in line, lower EPS. TP 1.97 (from 1.95), DPS stable, expected to grow sharply by TP 2.0, Confirms generous dividend policy. The effect of the economic recovery, the contribution of new assets, water and waste tariff increases, the ongoing efficiency improvements, are expected to boost Hera s results in the short term. TP 2.0, Hera 2009 results showed a strong and reassuring resilience of Hera s business portfolio. TP 2.31 (from 2.39), Q operating results in line. TP 2.0, Good results despite downturn and tax moratorium.

18 Change Consensus in April 2010 TP 2.1, TP 1,82 (from 1,75), hold Following the FY09 results, which were broadly in line with our estimates, we confirm our recommendation on Hera and we are increasing our target price: this could be justified by the strength of its management and the higher than average visibility on its key growth drivers. Add Banca Leonardo CAI Cheuvreux Merrill Lynch Santander Unicredit Target Price Consensus 30/04/ TP 1.97, TP 2.0, TP 2,0, Hera s strategy, based both on internal and external growth (via small and medium sized acquisitions) has so far proved very successful.

19 Change Consensus in May 2010 TP 2.1, Hera s 1Q10 operating results were +8% above our estimates mainly thanks to the waste and gas businesses. TP 1.75, neutral Hera reported sold 1Q results that were a bit below our estimates at bottom line but broadly in line with consensus. TP 2.0, Hera reported Q1 Ebitda, 3% better than expected. TP 2.0, TP 2.31, TP 2.3, We confirm our positive stance on Hera also in the light of the strong set of results posted. The company confirmed its defensiveness and its ability to grow even in a difficult macroeconomic environment. Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Add Target Price Consensus 19/05/ TP 2.0, 1Q2010 results healthy ahead expectations. In particular, the outperformance was driven by gas division and waste treatment business. TP 2.0, add Positive 1Q10 results, with EBITDA higher than our forecast. TP 2.0, outperform Good Q1, above expectations thanks to Waste and Gas. TP 1.82, hold TP 2.3, initial coverage We see Hera as a strong risk/reward story with significant long-term upside potential. TP 1.97, Results beat estimates thanks to waste and district heating.

20 Change Consensus in June 2010 TP 2.1, TP 2.0, Our TP for Hera is based on SOP analysis. The risks to our TP are: 1) unexpected change in the regulatory environment; 2) unexpected changes to renewable legislation in Italy, in particular referred to the treatment of WTE plants; 3) unexpected commodity pressures; 4) unexpected fall in gas and electricity demand due to mild weather conditions. Add Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Target Price Consensus 30/06/ TP 2.3, TP 1.94 (from 2.0 ), outperf. We believe that confirmation of the dividend policy is key, with 11 cents to be paid for 2011 vs. 8 cents for 2009.

21 TP 2.1, Positive trend should continue. We expect strong results, mainly thanks to the cold climate, to the gas tariffs and to waste business. Change Consensus in July 2010 TP 2.3, This operation represented a crucial step for Hera in order to play a leading role in the new concession races due to start next year. TP 2.00, add TP 2.0, outperform We reiterate positive stance on the stock based on a superior growth profile and reasonable multiples. The sale of a minority stake is good news as the price valorise the waste business above market expectations. TP 1.75, neutral This is a positive deal that confirms Hera s leadership position in the waste management sector and its ability to attract investments from specialised players. TP 2.0 (from 1.92 ), The deal was expected and the relating cash in also enables to immediately rebalance the Group 2 financial structure. TP 2.0, Overall a good transaction, in our view, that could help re-ignite Hera s growth story. Add Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Target Price Consensus 30/07/ TP 2.27 (from 2.31 ), TP 2.0, TP 1.82, hold TP 2.3, This deal should unlock the value of the waste business not reflected in current trading price. TP 1.94, TP 1.96, outperform We would expect the share to take advantage of new growth opportunities in the highly strategic waste business event outside of its reference geographical market in Italy and abroad.

22 Change Consensus in August 2010 TP 2.1, 2Q operating results were above our estimates mainly thanks to electricity business. TP 1.75, outperform (from neutral ) A solid boat to navigate through uncertain times. TP 1.92, Q2 ahead of forecasts, cautious full-year and dividend guidance. TP 2.16 (from 2.27), Operational excellence for safe harbour. The most appealing riskreturn profile inside the sector. TP 2.3, Good results, above our expectations and consensus. Notwithstanding the difficult macroeconomic context, Hera posted a sizeable +16% growth in terms of Ebitda, the highest growth posted among the utilities we cover. TP 2.0, Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit TP 2.0, TP 2.0, add 1H results were better than our forecasts, both in terms of Ebitda and Net Income. Add Target Price Consensus 31/08/ TP 1.96, outperform TP 2.0, outperform Better than expected Q2 results. We confirm our positive stance on the stock based on double digit growth, sold balance sheet and FCF generation, potential espansion in waste business. TP 1.75 (from 1.82), (from hold ) Strong management commitment to de-leveraging, expected net profit growth and attractive dividend yield expect over the next few years. TP 2.3, TP 1.84 (from 1.94), The worst performer despite solid 1H. Solid 1H10 results thanks to Gas sector as well as in water.

23 Change Consensus in September 2010 TP 1.84, TP 1.75, outperform A solid boat with some gearing to a potential recovery. We have always liked Hera based on factors such as its solid management, increasing cash flow generation and relative stable business. The Group has better than average momentum and is helped by a relatively conservative financial structure, which helps in uncertain times. TP 1.8 (from 2.00), The company had the best operational performance in H1 and we would expect a similar trend in the second part of the year. This has not been reflected in the share price. TP 2.0, Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Target Price Consensus 30/09/ TP 2.3, best pick Improving operating performance not priced in TP 1.96 (from 2,0), (from add ) The new business plan could show some upside versus the previous one in the gas business, both in the regulated and in liberalized business. A possible downside could regard the net debt target, but it could be offset by the cash in for the sale of Herambiente minority stake and by improving financial ratios due to additional cash flow contribution from the completed plants. TP 2.1, best pick Hera is among our best picks thanks to its +41% potential upside, the lack of governance problems and its strategy to grow in the waste sector awaiting the next catalyst ( business plan).

24 TP 1.70 (da 1.75), We reduce our target price by 5 cent due to a worst forecast of 2014 net debt but we confirm rating thanks to attractive and safe dividend yield, the solid financial structure (one of the best amongst italian local utilities) and an expected cagr in net profit of ca. 5% TP 1.84, Hera BP released aggressive targets in term of Ebitda growth mainly thanks to the improvement in aste business. Althought the stock is now one of the worst in rhe segment, it remains interesting TP 2.0, Change Consensus in October 2010 Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Target Price Consensus 30/10/ TP 1.8, Hera business plan shows an Ebitda growth mainly undepinned by organic growth. Regardin Green certificates, Hera management belives that government will act in order to guarantee stable and attractive returns to meet 2020 targets TP 1.96, outperform We maintain our rating in light of the visible valuation gap accumulated by the stock TP 1.96, As usual management provided high visibility on the targets and strategy. During the presentation, management highlighted that opportunities in gas networks acquisition could arise since tender bids are going to start TP 2.1, Hera s business plan came out with credible targets. It smulti-utility strategy was reiterated and share upside potential is ca. 40%. Hera is the only local utility in Italy without governance problems TP 1.75, outperform Hera new business plan is well structurated and shows an Ebitda growth underpinned by waste business and annunces an appealing dividend policy. We consider the relatively conservative financial structure as a plus in such uncertain times

25 Change Consensus in November 2010 (1) TP 2.1 Bond should allow exploiting further growth opportunities. Acam deal is positive as it is in line with declared external growth strategy TP 1.70 Q3 results are positive so we maintain unchanged our valuation thanks to low risk profile. The acquisition of Acam underlines Hera management commitment in M&A process. This news is positive because Hera can expand its customer base and can consolidate its partnership with Eni Next page of November TP 2.0 Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Q3 performance has been outstanding, with a very good result in gas area. We appreciate Hera bond emission to balance its financial structure. Acam could yield good synergies at an attractive price Target Price Consensus 30/11/ TP 1.96 outperform Regarding to Acam deal, we appreciate the effort to find an alternative growth option to the consolidation process in the utility sector TP 1.90 (from 1.96) Hera disclosed positive Q3 results, thanks to the higher exposure to regulated business and new plant contributions. The exercise of the option confirms the interest of the market for the bond issue while dilutive effect is negligible. The Acam deal is positive news in term of M&A newsflow but Hera must pay attention to Acam financial profile TP 1.84 Q3 results are better than our preview. The unexpected bond emission could finance activities and growth opportunities. Regarding to Acam deal, final multiples are appealing but the main question mark is about debt reduction

26 Change Consensus in November 2010 (2) TP 1.8 (from 2.0) outperform We remain positive on potential acquisition of Acam because of Hera growth profile and reasonable multiples TP 2.3 Acam deal is positive because of not significant investment and the adding of 120k clients with strong potential Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Target Price Consensus 30/11/ TP 1.75 outperform Acam deal seems to be interesting thanks to the potential opportunities in a contiguous territory and thanks to low initial investment TP 2.0 We believe that the market will welcome the deal because Hera would acquire a platform to enter some neighbouring areas in Northwestern Italy Previous page of November

27 Change Consensus in December 2010 TP 2.1 We belive that the Italian decree for the development of renewable energy will be negligible for Hera and Italian utilities TP 2.3 ; Top picks With the largest part of the investments now completed, Hera will focus mainly on improving the profitability of its asset base. Hera is one of the best positioned players for the winter season and it s the best positioned multi-utility to take advantage of the consolidation of nonlisted utilities. Axia Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Santander Unicredit Target Price Consensus 30/12/ TP 1.96 (from 1.90) ; Top picks We select Hera as our top pick for 2011 for its higher visibility of operating results due to lower exposure in the liberalised business and the positive investments completed in the past (mainly in waste area) TP 1.75 (from 1.84 ) New BP has an aggressive target in term of Ebitda growth, but the FCF is still quite poor. The stock has a visible yield of 6.3% on 2010, rising to 7.7% in 2014E

28 Change Consensus in January 2011 TP 1.95 (from 2.00) ; Top picks Hera remains one of the most promising Italian local utilities. A good combination of defensiveness and an interesting growth profile should keep the stock in the spotlight Axia Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus 31/01/ TP 2.0 The attractive equity story, which is based on sound internal and external growth prospects combined with FCF generation, remains intact.

29 Change Consensus in February 2011 Axia Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus February 28,

30 TP 2.3, We remark that the company has already reached the announced target of EBITDA growth for the gas division over the period. We confirm our positive stance on Hera for the good results posted and also for its sound financial structure. TP 1.90 Results were in line with expectations. The positive results reflect the favorable conditions for gas purchasing activities and in gas distribution (thanks to the RAB review) Change Consensus in March 2011 (1) Axia Add Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus March 31, TP 1.9 (from 1.8) outperform We confirm our positive stance: solid organic growth coupled with de-leveraging (growing cash flows and declining capex). After rolling forward our valuation, we fine tune our TP to EUR1.9 TP Q10 results slighly above our estimates. Despite the limited potential upside, we maintain our positive view on the stock in light of the lower than average financial leverage, short position towards energy liberalized businesses and selective approach on M&A. TP 2.1 Hera s 4Q10 results beat our expectations mainly thanks to the good performance of the gas business. We reiterate our rating in view of its ca. +30% potential upside and the limited downside risk of the regulated businesses. TP 2.0 After 2010 annual results, Hera remains a solid story of safe earnings growth, good dividend flows and clear M&A accretive chances

31 Change Consensus in March 2011 (2) TP 2.3 Hera reported a good set of FY2010 results, in line with our expectations at operating level with strong growth in all divisions. In 2011 the company should benefit from the full operations of the Modena and Rimini WTE, while gas margins should continue be strong TP 1.95 Hera posted a good set of results. We highlight its defensive features thanks to its regulated businesses, good Gas margins and the start of cash flow generation, after last year's investments, with possible M&A deals on top. Axia Add Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus March 31, TP E EBITDA up by 10% or 1% above estimates and net profit at 117 mn Vs expected 94 mln. The stock was the best performer of the last 6 months (+20% relative). Hera is still cheap in terms of EV/EBITDA at 6.1x vs. sector 7.5x. TP Q10 results in line at operating level and DPS as expected. Strong performance in the Gas business while weak waste business

32 Change Consensus in April 2011 TP 2.1 We expect stable results on a tough comparison with the strong 1Q10. Focus: on small M&A deals and business plan implementation. Axia Add Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus April 29,

33 TP 2.3 Hera reported an impressive set of results in the first quarter, Specifically the numbers were very strong in energy where Hera can leverage on short positions both in electricity and gas. TP 1.90 Hera reported very positive results, coming out much better than our forecast. The main difference versus our forecast regards the gas business EBITDA which came out EUR 99.1M and the electricity business EBITDA which came out at EUR 28.5M Change Consensus in May 2011 (1) Add Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus May 31, TP 2.0 (from 1.9) Q1 numbers were well above our and market expectations. The +EUR39m growth was mainly explained by better energy margins and market expansion. For the third consecutive quarter, net debt fell slightly thanks to richfree cash generation TP 1.70 Hera as management has showed its strong ability in increase the market share of the in the energy liberalized activities and to post healthy growth in regulated (waste) and semi-regulated activities. TP 2.1 Number upgrade after a brilliant 1Q11. Hera s 1Q11 results beat our expectations thanks to the positive contribution of all business lines. we lift our FY11e estimates by +4% at EBITDA level and by +13% at EPS level. Go to May (2) TP 2.0 Impressive results of commercial energy activities in Q1 has driven to a good overall result.

34 Change Consensus in May 2011 (2) TP 2.3 Hera reported an impressive set of results, with solid performance in all divisions, underpinning a 40% net profit increase. Specifically the numbers were very strong in Energy where Hera can leverage on short position both in electricity and gas. TP 1.85 (from 1.8) Booming first quarter. HERA reported a set of 1Q11 results which were even better than expected at all levels. Gas was 17% higher than forecast and Electricity doubled compared to 1Q10. Go to May (1) Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit TP 2.0 (from 1.9) Add Target Price Consensus May 31, Hera continues to deliver in terms of EBITDA and dividend growth, reduced capex after last year's significant infrastructure investments. We expect Hera to continue on the organic growth path, with M&A providing a further boost. TP 1.89 (from 1.75) Considering the excellent group results, especially in comparison to the rest of the sector, we expect the market to react positively, moving the stock to around 1.8. TP 1.96 Strong set of results with positive contribution coming from all of the group area of operations..

35 Change Consensus in June 2011 TP 2.0 (from 2.1) Even if we do not expect dramatic changes in the water business remuneration (as huge investments are needed in the Italian water market), we keep a cautious approach and cut the e water capex plans by -40%, the EBITDA margins by -100bps and Hera s target prices by -4%. TP 1.70 (from 1.85) We remain convinced that the government and parliament will find a solution to neutralize the impact of the referendum on tariffs. It is quite possible that tariffs on current concessions will not be modified, as they are based on long term agreements between the concession holder and local authorities. Banca Leonardo CAI Cheuvreux Deutsche Bank Merrill Lynch Unicredit Target Price Consensus June 30, TP 1.80 (from 1.89) The approval of the referendum on the public services deteriorate the outlook of the companies involved in the water segment. HERA is moderately exposed to the segment with around 22% of our SOTP linked to the water services. We cut the target by -4.6% at 1.8 per share. TP 1.85 (from 2.0) On the basis of a 150bp-200bp cut on returns, we have made a downward forecast revision for the most affected companies and reduced our target price but we still view Hera as the most favorable options to invest in Italian local utilities

36 Change Consensus in July 2011 TP 1.65 (initial coverage) Although Hera and Iren stocks show similar valuation multiples, we prefer Hera for its lower exposure to Italian power generation, lower balance sheet leverage and absence of refinancing risks. TP 1.60 (from 1.70) On the back of slightly more conservative projections for electricity prices and spark spreads and higher interest rates, we have trimmed our forecasts for the majority of Italian Utilities. In terms of valuations we have lowered all the target prices to reflect reduced forecasts, higher WACCs (risk free rate from 4.80% to 5.25%) and greater political/regulatory risk. Banca Leonardo CAI Cheuvreux Deutsche Bank Exane Merrill Lynch Unicredit Target Price Consensus July 31, TP 1.90 We believe the reasons underlying the recent stock underperformance are groundless. Accordingly, we see a good chance for investors to enter at cheaper levels and reiterate our rating and EUR1.9 TP.

37 TP 2.3 Sound growth in H We confirm our positive stance on Hera. The company confirmed its defensiveness and its ability to grow in a difficult environment for utilities. TP 2.0 Hera s 2Q11 results came out slightly weaker than expected after a brilliant 1Q11, but management is confident in implementation of the business plan. TP 1.42 (fromadd) Although waste sector results, thanks to gas margin increases, opportunities in the energy and tariff hikes in regulated businesses, Hera is increasing its unit margins, and reported positive results in 1H11. TP 1.60 (from1.65) Good results in a tough environment. Waste business EBITDA growing despite cyclical weakness in volumes. Impact from Robin tax should be limited Change Consensus in August 2011 Banca Leonardo CAI Cheuvreux Deutsche Bank Exane Merrill Lynch Unicredit TP 1.85 (from2.0) Hera remains one of our top picks among the Italian local utilities. It is good that the company mentioned that the Robin tax should have a much lower impact than we initially thought. TP 1.45 (from 1.60 ) Target Price Consensus August 31, Highly Visible 7.8% Dividend Yield Just Too Attractive To Ignore. We believe that HERA is already pricing in potential negative surprises. TP Q11 results and the outcome of the conference call reassures us that the recent drop of the stock is not due to any deterioration in Hera s fundamentals. TP 1.58 (from 1.80 ) Hera reported the highest EBITDA growth in the utility sector in 1H. The company has a short position in the electricity and gas markets, where margins are under pressure. TP 1.85 (from 1.90) H1 EBITDA is still set to clock up 11% growth thanks to the buoyant Q1 performance. The yearly delta of H1 EBITDA. TP 1.96 (from 1.76) Solid set of results spot on our forecasts. We confirm our rating.

38 TP 1.4 (from 2.3) Taking into account the current macroeconomic environment and by factoring in the Robin Hood Tax impact, we have fine tuned our estimates. Given the still ample upside potential in comparison to our target price (nearly 40%), we reiterate our BUY recommendation on the stock. TP 1.58 (from 1.60) Following the final approval of the Austerity Package from the Italian Parliament, we have adjusted our estimates on Hera. We prefer Hera because of its leading position in the Italian waste management industry, its well balanced business mix and its low exposure to the Italian power generation market. Change Consensus in September 2011 Banca Leonardo CAI Cheuvreux Deutsche Bank Exane Merrill Lynch Unicredit Target Price Consensus September 30, TP 1.9 (from 2.0) We included the Robin tax in our back estimates and valuations of Italian utilities. At the same time, we assumed a new, higher risk free rate in our valuations, lifting our aggregated WACC from 6% to 6.4%. TP 1.41 (from 1.82) 2Q11 results were in line with our estimates. However, we expect Hera s fundamentals to deteriorate in the medium term due to the negative impact of new regulatory factors and a potentially significant slowdown in Italian economic activity (although Hera is partially protected as ca. 80% of its EBITDA comes from regulated/semiregulated activities). TP 1.40 (from 1.45) A dramatically deteriorated macro scenario leads to an increase in refinancing risk and continued operating weakness. TP 1.35 (from 1.85) We have revised our estimates for Hera taking into consideration the increase in IRAP and the impact of the "Robin Hood" tax. Hera remains one our most preferred stocks amongst the Italian utilities due to its prospects for organic growth, its short position in both power and gas and its strong cash flow generation. TP 1.90 (from 2.3) Strong business fundamentals, despite deteriorating macro outlook. Sound and defensive business model should protect profitability. Austerity measures excessively discounted by the market.

39 Change Consensus in October 2011 TP 1.9 Hera is the only local utility that has never had governance problems and we consider this a significant plus considering the tough business plan execution that some of its competitors are experiencing.. TP 1.9 After the possible Acegas acquisition, Hera should keep our estimated 2.9x Net debt/ebitda in 2012E and generate some EUR15m synergies, while expanding in a rich area with potentially less governance problems than Central Western Italy. Banca Leonardo CAI Cheuvreux Deutsche Bank Exane Merrill Lynch Unicredit Target Price Consensus October 31, TP 1.35 Hera remains one our most preferred stocks amongst the Italian utilities due to its prospects for organic growth, its short position in both power and gas and its strong cash flow generation. Mr. Tommasi's statement on Acegas does confirm Hera's commitment to being one of the main players in Italy's energy sector consolidation.

40 Change Consensus in November 2011 (1) TP 1.4 The new business plan is ensuring investors a sound growth (5.6% EBITDA CAGR) over the period, continuity in comparison to the targets included in the previous business plan, transparent, concrete and achievable targets. TP 1.41 (da 1.82) We consider neutral the 3Q11 results and the new business plan which includes challenging operating targets, does not provide any dividend policy and does not give any guidance on the EPS dynamic through the period covered by the business plan. CAI Cheuvreux Deutsche Bank Exane Unicredit Target Price Consensus November 30, TP 1.55 (from 1.58) Better than expected EBITDA offset by higher provisions and tax rate. Resilient business mix provided balanced growth. Environmental division supports the bullish targets of the Business Plan. TP 1.42 Hera reported 3Q11 results almost in line with our forecasts in terms of EBITDA. The business plan update confirmed the main projects and targets of the previous plan; the 2015 target was above our current forecast in terms of EBITDA, but also debt. TP 1.8 (from 2.0) New plan confirms growth & deleveraging. Q3 EBITDA in line, net profit below. Higher debt.. TP 1.80 (from 1.90) Hera's strategy plan confirmed the sound strategic positioning in all business lines, the balanced mix and the superior growth potential as a leader in the waste market in Italy. Overall we believe that those targets are achievable and are consistent with the strategy. Go to November (2)

41 Change Consensus in November 2011 (2) TP 1.35 (from 1,40) We note that within the sector, HERA has undergone one of the most severe deratings and we calculate that its competitive activities are currently priced at a modest 2011 EV/EBITDA multiple of 4.3x. Also, the group s financial structure is one of the most prudent in its sector and future speculation on M&A could materialize in TP 1.9 Positive stance confirmed thanks to defensive strategy. confirmed as we like Hera s credible and defensive strategy associated with its appealing dividend yield. Go to November (1) CAI Cheuvreux Deutsche Bank Exane Unicredit TP M11 results were in line at operating income and below expectations at net income level. We believe that the company's BP update remains solid, and can be seen as the natural evolution of the previous one. Target Price Consensus November 30, TP 1.49 (from 1.58) Hera our preferred choice in this environment. Iren the cheapest. We are confirming Hera (BUY) as our preferred pick today, in light of the lowest debt, the short position both in electricity and gas and the attractive confirmed yield for this year. TP 1.54 (from 1.96; ) BP: no surprises, uncertainty stays. 3Q /9M number in line with forecast at operating level.

42 Change Consensus in December 2011 TP 1.9 We continue to appreciate Hera s defensive strategy, appealing dividends and note that it is the only Italian local utility without governance problems. CA Cheuvreux Deutsche Bank Exane Unicredit Target Price Consensus December 30, TP 1.42 ; Top pick 2012 We selected Hera as a top pick among the Italian local utilities we cover, as: 1) we see a still positive EBITDA and earnings momentum thanks to the solid results of gas sales activities, low exposure to electricity production and the defensive characteristics of regulated activities; 2) the longer duration of the current water services tariff contract (expected to expire by next year) compared with other local utilities; 3) lower short-term EV/EBITDA multiples (6% discount vs. peers in FY11E); and 4) the higher visibility vs. peers on 2011 dividend.

43 Change Consensus in January 2012 TP 1.9 We continue to appreciate Hera s defensive strategy, appealing dividends and note that it is the only Italian local utility without governance problems. It is still growing despite the tough macro scenario. Add CA Cheuvreux Deutsche Bank Exane Unicredit Target Price Consensus January 31, TP 1.19 Add (from 1.42; ) After our revision on WACC, we reduce the target price and we change our rating to Add, due to the low upside potential.

44 Change Consensus in February 2012 TP 1.4 (initial coverage) When it comes to dividend sustainability, we think that Hera stands out both in absolute and comparable terms, thanks to the lowest leverage within the sector, its low refinancing needs and a solid operating cash flow generation. Banca Aletti Add CA Cheuvreux Deutsche Bank Exane Target Price Consensus February 29, TP 1.27 (from 1.54) Despite recognizing the group sound strategic positioning in all of its key area of operation, we see the large importance of waste as a key driver of growth in meeting the group announced 5.6% EBITDA CAGR to 2015 as risky. TP 1,6 (from 1,8) We prefer HERA (2/OP - TP EUR1.6 40% upside) among the small cap utilities, as its financial leverage is coherent with its business mix (60% regulated) and there is superior visibility on dividends.

45 TP 1.4 Hera posted positive figures. Results mainly benefited from the sound performance of electricity division (+22% at an EBITDA level YoY). Group EBITDA increased by around 6% YoY, recording one of the best performances expected in the Italian utilities universe in 2011 (once again!). This confirmed the strong defensiveness of the company even in a difficult environment. TP 1.41 Positive surprise came again from the gas division which has more than offset the lower than expected results in the electricity and in the waste division. In details, the strong 4Q11 EBITDA of the gas division is mainly due to the competitive procurement costs as a consequence of no take or pay contracts, the expansion of the customer base and the contribution of trading activities. Go to March (2) Change Consensus in March 2012 (1) Banca Aletti CA Cheuvreux Deutsche Bank Exane TP 1.50 We are maintaining our rating on Hera with a TP of EUR1.50. Our investment case is based on the group s leading position in the Italian waste management industry, the balanced business mix with minimal exposure to Italian power generation, a solid balance sheet, undemanding valuation of 5.8x EV/EBITDA 2012e and sustainable dividend implying an 8.2% yield (2012e). Add Target Price Consensus March 31, TP 1.25 (from 1.19) Add FY11E reported positive operating results. In particular, we appreciate the fact that Hera has maintained the same dividend yoy, which, considering the current market price, implies a high dividend yield. TP 1.6 Net debt at <EUR2bn was good and below the Q3 level, thanks to a sharp reduction of working capital in Q4. We confirm HERA as a best pick among local utilities on the back of its stable financial structure, visible organic growth and above-average DY. Its short position in gas and electricity is a competitive advantage in the current context of overcapacity. TP 1.9 Solid results, appealing dividend. Business plan on track. We confirm our cautious operating estimates, while reducing the tax rate from 45% to 43% and consequently increasing our EPS estimates by 2.5% on average in

46 Change Consensus in March 2012 (2) TP 1.4 Our positive initial impression (see attached below) is strengthened by further positive details on FY11E results, and by management's confidence in the full sustainability of its latest business plan targets. Both the negative one-off on waste and ca Eur 5-7m of recurring tax savings might imply some upside to be rolled-over 2012E in our estimates, as well as a strong and better than expected progression in gas and electricity marketing customers. Banca Aletti Add CA Cheuvreux Deutsche Bank Exane Target Price Consensus March 31, TP 1.80 Hera reported a solid set of results with growth driven by balanced portfolio of activities which is allowing offsetting the weak macro environment. More importantly the management confirmed DPS of E0.09 to be distributed in June, offering 8.5% yield. Go to March (1) TP 1.48 FY11A reported positive operating results. In particular, we appreciate the fact that Hera has maintained the same dividend yoy, which considering the current market price, implies an 8.2% dividend yield. We fine-tuned our 2012E-14E forecasts mainly reducing net debt, with a positive impact on our DCF-based valuation. TP 1.35 A Comforting Outlook for Strong 4Q11 results in line with estimates. Net debt stood at Eu1,987mn sliglty below estimates also thanks to a good work on working capital. We believe that in order to see any growth in 2012 Hera will have to tap into external growth but even when excluding that the group should be able to roughly confirm 2011 results.