(Finance) – Profile Bank has increased the target price (to 15.20 euros per share of 13.70 euros) and confirmed the recommendation (Buy) on the title Adriatic electrical distribution (DEA), operator listed on Euronext Growth Milan and active in the distribution of electricity and public lighting management in the center and northern Italy.
Analysts have Increased estimates on revenues for 2025-27 8.7% per year compared to the previous estimate, since they had underestimated the revenues of the distribution for 2024. They maintained almost unchanged the annual percentage growth for distribution in 2025-27, since the growth is driven by the tariff methodology. Public lighting and more have remained unchanged. It is remembered that the growth of revenues in 2025 is mainly linked to the consolidation of ASPM. They reviewed the cost hypotheses mainly in relation to the cost of services (+15% compared to the previous estimate), which in 2024 was higher than the forecasts, and the cost of labor (-10% compared to the previous estimate). THE’Increase in turnover has more than compensated the impact on the ebitda marginwhich now stands at 39.9% in 2025 (+1.1 percentage points compared to the previous estimate) and 40.8% in 2026 (+1.6 percentage points compared to the previous estimate) and in 2027
At the end of 2024, a Amendment to the Budget Law It extended the concession (expiring in 2030) up to 20 years, subject to the presentation of an investment plan. That is delete the competitive tender procedure scheduled for 2030guaranteeing current distributors a longer operational horizon. A key aspect of the Equity Story of DEA was the consolidation of small operators with a distribution capacity of less than 25,000 units, not suitable for the renewal of concessions and too small to be objective of large multiutility.
Banca Profile recalls that the sector is highly fragmented in terms of number of distributors, but highly concentrated in terms of distribution capacity with: i) E-Distribuzione (85%), ii) 5 companies (11%), III) Over 100 companies (4%). Although the budget law does not establish explicit thresholds in terms of pods required for the extension, current legislation allows the autonomous development of investment plans exclusively for distributors that serve more than 100,000 pods. In addition, smaller operators could be less equipped to support the requested investments, in terms of financial capacity and executive complexity.
“Therefore, although the regulatory framework is undergoing significant changes and an implementation decree will have to specify the details of the extension, we believe that the underlying trends continue to aim for consolidation – reads the research – in this scenario, Dea remains well positioned to act as an aggregator Hubthanks to its proven executive capacity (5 operations from 2023) and the right to acquire 24,000 pods (with a price cap of 20 million euros) “.