The Business Plan driving Hera to 2026 includes investments for 4.12 billion euro, 7% more than the cumulated amount envisaged for the 2021-2025 period.
Organic investments are mainly focused right there where Hera already enjoys a solid competitive position: in the Networks, where the Group has proven to be able to seize the advantages of the regulatory system, and in Waste, where a strengthened asset base will intercept the attractive dynamics of demand. Being ready for catching the new PNRR opportunities and the increasing value-added services demand, the Company has several and well-managed levers to translate the increased investments into healthy returns. Therefore, EBITDA is expected to increase by almost 250 million euro over the five-year period covered by the Plan.
Over the five-year period, Hera will concentrate more than half of its 4.1-billion-euro investment plan on Networks, with the aim of leveraging on the existing infrastructure, a real strategic asset that will be strengthened and transformed to respond to the new challenges of Climate Change, while offering the Group visible returns with a low risk profile.
Hera will also allocate significant capital to Waste (29% of total investments), with this area expected to generate attractive returns that will drive the Group’s EBITDA growth. Hera will intercept a demand for increasing circularity, also in new vertical segments, by offering services that thoroughly meet the needs of business customers.
Despite the recovery from last October’s lows, the price level at which the Hera stock is trading indicates that there is still a considerable gap to fill compared to the FTSE MIB performance and the average share target price of the analyst coverage, today at 3.6 euro.
The release of the preliminary 2022 results will provide evidence on the profitability recovery in the Energy area in Q4, together with a declining leverage. Thus, the market will have new elements to update the valuation of Hera stock. Investors will also be able to draw reassuring elements on the solid profile of the future growth from the targets of the new Plan to 2026, set in continuity with past strategy.
Hera enjoys a leading competitive position in the Waste business in Italy. The new Plan to 2026 outlines a clear strategy: to leverage the Group’s existing widespread plant base and its ability to intercept annual waste volumes of over 6.7 million tonnes to increase its competitive advantage.
The idea is set in a context that is favourable from several points of view: the issue of protecting the environment through proper waste treatment and disposal is felt by citizens and is a legal responsibility for the companies that generate the waste. Both the new tariff framework for the treatment of municipal waste and the Italian government’s PNRR contain mechanisms that incentivise investment in the business, while the market price-trend has been positive for six years.