RWE GR

RWE AG

Energy, Event Driven/Special Sit, Utilities


Presented:01/29/2020
Price:€31.34
Cap:$21.46B
Current Price:€31.80
Cap:$26.35B

Presented

Date01/29/2020
Price€31.34
Market Cap$21.46B
Ent Value$19.34B
P/E Ratio2.03x
Book Value€25.33
Div Yield2.23%
Shares O/S614.75M
Ave Daily Vol3,408,579
Short IntN/A

Current

Price€31.80
Market Cap$26.35B
RWE AG is a holding company, which engages in the generation, transmission, distribution, and trading of electricity and gas. It operates through the following segments: Lignite & Nuclear, European Power, Supply & Trading, and innogy. The Lignite & Nuclear segment covers electricity generation in Germany using lignite and nuclear power. The European Power segment comprises the electricity generation business in Germany, the U.K., the Netherlands, and Belgium using gas and hard coal power plants. The Supply & Trading segment concentrates on trading in electricity, natural gas, coal, oil, carbon dioxide certificates, and biomass. The innogy segment focuses on renewable energy, distribution networks, and retail. The company was founded in 1898 and is headquartered in Essen, Germany.

Publicly traded mentioned companies herein: RWE AG (RWE GR), Ørsted A/S (DNNGY US)

Highlights

The presenter is long shares RWE AG (RWE GR), a German electric utilities company which is in the middle of a business transition into renewable energy. Historically viewed as a “dirty business” in Europe, the presenter views the company’s pivot from coal into renewables as a positive catalyst and likes the risk/reward setup. He views ESG as the next FAANG, and with the recent elimination of RWE AG’s coal legacy overhang he models a price target of €62, representing 100% upside from current prices.

At €20B market cap, RWE AG is a hated business in the EU, with the presenter noting that environmental protesters raid their facilities several times a year. However, he is positive on the company’s pivot to renewable energy and shift away from coal. The presenter notes that this could offer significant upside to the stock over the next couple of years, since carbon prices in the EU have jumped from $6 to $25 per tonne in the last year alone. The government imposed coal exit by 2038, for which it will receive compensation. 

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Idea Discussion

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