Analyst Note| Tancrede Fulop, CFA |
We plan to tweak upward our EUR 16.5 fair value estimate after no-moat Engie released strong first-half results and conservatively maintained its 2022 guidance while pointing to material upside should current power prices persist. The group has also materially reduced its exposure to Russian gas. This print confirms our view that the firm is one of the main beneficiaries of skyrocketing power prices among European utilities, while its exposure to Russian gas is overestimated by the market. Shares are materially undervalued as evidenced by a 2022 P/E of 6 assuming current forward power prices persist. In this case, the low end of the payout guidance involves a dividend of EUR 1.2, implying a 10% yield.