Erg flies with Kepler boost, between EU tax policies and delisting scenarios

(Il Sole 24 Ore Radiocor) - Erg is soaring in the Italian Stock Exchange, boosted by the positive judgments of Kepler's analysts, who raised the rating from 'Hold' to 'Buy' and increased the target price to €27 per share from the previous €24. Thus the stock (on the morning of June 5) gained 7% to €24.9 per share, making it one of the best in the Italian Stock Exchange (Ftse Mib at -0.1%). The merchant bank's experts see 'an improvement in the outlook for renewable energy operators in Europe', as EU states 'will have greater fiscal flexibility to address, among other things, the problem of affordability of energy bills, accelerating the development of renewables and storage systems, improving authorisation procedures for renewable plants, and supporting industrial decarbonisation' through power purchase agreements. Not only that, Kepler brings back to the fore the scenarios concerning a possible reorganization of Erg, controlled by the Garrone family, flanked by the Australian fund Ifm, defining the group "a candidate for delisting, because it is at a discount and has a low debt financial structure". Among the possible accelerators of the stock, the broker cites the withdrawal of the share from Piazza Affari or a "business combination", with in the background a new industrial plan to be presented in 2027, perhaps - Kepler wonders - after there will be greater clarity on governance?". In recent months, as we know, rumours had circulated, unconfirmed, on the interest of large entities such as A2A or Eni for the group based in Genoa.

Returning to the report and to the 'European' factors supporting Erg, Kepler recalls that the European Commission has agreed to grant more fiscal flexibility to member states (equal to 0.3% of GDP per year, with a cumulative limit of 0.6% of GDP over the 2026-2028 period) for investments aimed at energy security and the transition from fossil fuels. "For Italy, this is equivalent to around EUR 6.77 billion per year, based on the GDP forecast for 2025," point out the analysts, who therefore believe "that the prospects for renewable energies have improved both in Italia and in Europe, which represent Erg's main market". Also benefiting from this new European development is Alerion, which rises 1.2%.

The new energy price scenario therefore entails - the experts specify - an average increase in Erg's Ebitda of about 6% over the period 2026-2028 and an average increase in net profit of about 20% over the same period. In addition, Kepler included in the model the Nulvi repowering project (121 Mw, of which about 100 Mw of additional capacity), which has obtained all the necessary authorisations and is not included in Erg's current business plan. "Once completed, we expect the project to contribute at least 300 GWh per year of energy production," they write from the merchant bank.

For analysts, as mentioned, Erg continues to be "a possible candidate for delisting (due to a low market valuation and a low debt financial structure)". In fact, Kepler estimates that 'the forecasts provided by management for 2026 are excessively conservative' and that 'the greater budgetary flexibility granted to the government could also favour the development of renewable energies'. Currently, the stock trades 'at around EUR 1.3m/Mw in 2027 and EUR 1.2m/Mw in 2028, levels that represent a discount to its historical valuation based on this parameter; the investment cost to build new greenfield renewable capacity; the value of existing assets, weighted by technology; and the potential value of growth from projects under development after 2028, which the market seems to implicitly value at zero'.