(AOF) – Jefferies has confirmed its buy recommendation and €16 target price on EDF despite the new cut in nuclear production estimates this year. The impact of the decline in nuclear production in France on the Group’s EBITDA for 2022 has been reassessed at approximately -18.5 billion euros, compared to 14 billion euros until then. The broker estimates that this 4.5 billion euro loss is equivalent to 1.2 euros per share.
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the main points
– The world’s leading low-carbon energy company created in 1946 with 38.5 million customers worldwide and 117.3 gigawatts of installed capacity: 60% nuclear, 18% hydraulic, 8% renewable, and 9% In gas, 3% in fuel oil and 2% in coal
– turnover of 84.5 billion euros and installed capacity of 117.3 gigawatts: 60% in nuclear, 18% in hydraulic, 8% in renewable energies, 9% in gas, 3% in fuel oil and 2% in coal;
– “Cap 30” business model with 3 strategic axes: support customers towards carbon neutrality through 10 billion in revenue in services, number one in the world producing net CO2 electricity and an actor in the energy transition;
– 83.88% of the capital is owned by the state, Jean-Bernard Levy is the CEO of the 18-member Board of Directors;
– The balance sheet was cleaned in April with a net debt (ranked A due to state guarantee) of 42.3 billion euros, which will be strengthened between 2022 and 2024 through the disposition plan of 3 billion euros.
– 4 strategic plans: Electric mobility – 30% market share in electrification of electric vehicles by 2023 in France, UK, Italy and Belgium – Storage of -10 GW installed worldwide in 2035- Solar energy – 30% of the market in France 2035 – The concession plan for the French nuclear sector.
Dedicated innovation strategy for digital transformation, production processes, future electrical systems and decarbonization of customer uses: R&D budget of €661 million with 756 patented innovations, EDF Pulse Croissance funds, incubator and research partnerships (Sinclair Lab, 5g Living Lab, Quantum Computing , etc.);
– Environmental strategy included in the group’s raison d’être: carbon neutrality in 2050 and 50% reduction, against 2017 emissions in 2030, 99% of operating budgets dedicated to decarbonization and energy transition, €8.755 billion in “green and sustainable” financing and 72% of Credit lines indexed by ESG indicators;
– launch of the construction program for 6 EPR2s and studies for 8 more;
Maintaining high wholesale prices, a partial equivalent to the state borders, to increase prices for individuals from operating profit.
Integrated operator, from design and manufacture of nuclear reactors, through Framatome, 75% owned, along with Mitsubishi (19.5%) through to distribution.
– the activity governed by the NOME law (free competition among all market actors and the resale of a quarter of EDF’s nuclear electricity production to its competitors) and the prices of electricity managed in France, so the maintenance cost network is little included in the tariffs;
– Solve the corrosion problems affecting the reactors, which led to the shutdown of nearly half of the production capacity.
– Impact of the conflict between Russia and Ukraine: raw material volatility and supply tensions;
– neutralizing the competitive advantage of nuclear energy by committing to selling electricity to industrialists at market price and closing or maintaining nuclear power plants, penalizing production in 2022;
– Speculation that the country will be removed from the list;
2023 target with debt leverage less than 3.
Managing high-risk waste
Annually 350 million tons of waste is generated in France. If 66% is recycled, the rates vary depending on the nature of the waste. So only 21% of plastics. In order to promote the circular economy, the country significantly supports research and development within the framework of the 3R strategy (“recycle, recycle and re-incorporate materials”). An envelope of 370 million euros will be allocated to her. With regard to hazardous waste, this activity is very profitable. In France, storage and processing capacities are extended compared to annual needs.