Enagas(ENG SM, UW–€19.55, PT €17.70)(Javier Garrido)Downgrade to UW.
Regulation adds insult to Tallgrass injury Wedowngrade Enagas to UW; our end-21 PT is €17.7 and our 21/22E EPS is10/9% below Bbrg consensus. The Spanish regulator just approved new opex allowances for 2021-26 that are c. €15m/year below its previous guidance. This comes on top of the hit from the review announced in 2019. Besides, we cannot see a recovery in Tallgrass earnings vs the guidance miss (c. US$100m inEBITDA in 2020) and see further pressure on its oil pipelines. Our base case assumes €46m avg dividends from Tallgrass in 2020-26 (vs target of €140m); and we see the risk skewed to the downside.
