Renta 4 || According to the press, access may have been granted to the draft prepared by the CNMC, the regulator of the electricity system, which establishes the remuneration for electricity networks, both transmission and distribution.
This draft would be pointing to a financial remuneration, known as TRF, of 6.5%. A rate that, although it is above the current rate of 5.58% and in line with our hypotheses of 6.5%, is below the proposals made by some of the companies in the sector, which requested a remuneration between 6.5% and 8%. Except in the case of Enagás (gas transmission networks, this rate could serve as a reference, but it might include certain nuances), the rest of the companies in the sector would have established their medium-term target hypotheses with higher rates.
It is also true that this leak does not mention the inclusion or exclusion of the remuneration for ongoing work and the updating of standards, both opex and capex, which could indirectly add some basic points to the remuneration of the networks depending on the conditions established in the final document, expected before the end of 2025.
In the news, they do mention the intention on the part of the regulator and the Government to lift/remove the annual investment limit imposed on the networks, which we consider key for accelerating investments in this area by the companies.
Valuation: By pointing this news to a TRF below the hypotheses of the companies for achieving their medium-term objectives (with the caveat that the remuneration for ongoing work and the updating of standards could lead to a final real rate closer to these hypotheses, it is still to be seen if that will indeed be the case) we do not rule out that this news may be received negatively by the companies in the sector.
In terms of impact level on the accounts of each company, the one with the greatest impact is Redeia (electricity transmission business in Spain represents 81% of total EBITDA, 83% of EV R4e) followed by Endesa (the networks account for 38% of its 2024 income statement, but 53% in EV R4e), and in a secondary position, the greatest impact would be for Naturgy (the electricity networks in Spain represent 12% of EBITDA, 17.5% of EV R4e), and the one with the least impact would be Iberdrola (the networks in Spain account for 9% of the group's EBITDA, 8% of EV R4e).
We reiterate underweighting in Redeia, P.O. 18.40 eur, underweighting in Naturgy with P.O. at 26.10 eur, hold in Endesa with P.O. at 27.40 eur, and hold in Iberdrola with P.O. at 16.60 eur.