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Equity

Daily Note

Calls from Italy			27 November 2020: 8:47 CET
		Date and time of production
On Our Radar: Today's Newsflow		Italy/Equity Market
	Stock Markets: Performance
Positive	Negative
	Chg (%)	1D	3M	6M	12M
Leonardo; Technogym; Fiera Milano	-		FTSE All Share	-0.4	9.8	23.4	-6.1
			FTSE MIB	-0.5	10.3	24.3	-5.7
New Research		2	FTSE IT Star	0.1	8.5	20.5	6.5
	Euro Stoxx 50	0.0	2.2	7.0	-8.0
Snam (ADD)	Company Flash: ADD (from BUY); New TP EUR 5.4/share 2	Stoxx Small 200	-0.3	6.1	15.0	1.0
NASDAQ	0.5	5.5	29.7	40.1
Strategy		3	S&P 500	-0.2	5.4	22.8	15.8
Italian Equity Market	Equity Risk Premium and Risk-Free Rate Reduced	3	FTSE MIB Best & Worst: 1D% chg	-2.5
Company News		4	A2A	4.2	Unicredit
	Telecom Italia	3.9	Azimut		-2.3
A2A (ADD)	MoU in Hydrogen	4	Pirelli	2.4	Saipem		-2.1
Abitare In (BUY)	Purchase of Complex Finalized	5	Euro Stoxx Best&Worst Sectors -1D %
Atlantia (HOLD)	CDP Offer Delayed	5	Health Care	0.7	Auto&Parts	-1.5
Banca IFIS (BUY)	Negotiations with IBL Banca News Abandoned	6	Technology	0.7 Oil & Gas	-1.2
Fiera Milano (HOLD)	Salone del Mobile Postponed to September	6	Travel/Leisure	0.6	Banks		-1.2
Generali (ADD)	Infrastructure Funds for European Recovery	7	FTSE MIB-STAR Performance (-12M)
Hera (BUY)	EUR 500M Bond Issue	7
Leonardo (BUY)	Contract for NH90	8	105
			110
Technogym (HOLD)	New Contract in MEIA	8	100
95
Telecom Italia (BUY)	Press Update on Vivendi's Complaints	9	90
80
			85
Terna (ADD)	Fitch Confirms Rating	9	75
70
Webuild (No Rating)	2020-23 Targets	10	65
60
			N D J F M A M J J A S O N
			FTSE MIB INDEX		FTSE ITALIA STAR
			Source: FactSet;

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What?	Where?	When?
ISMO Paris	Virtual	10-11 December

Report priced at market close on day prior to issue; Ratings and Target Prices as assigned in the latest company reports (unless otherwise indicated)

Intesa Sanpaolo Research Dept

Equity Research Team

Corporate Broking Research Team

Sales & Trading [phone]

See page 11 for full disclosure and analyst certification

27 November 2020: 08:48 CET

Date and time of first circulation

Equity Daily	27 November 2020

New Research

Snam (ADD)

Company Flash: ADD (from BUY); New TP EUR 5.4/share

	Rating ▼	TP (€/sh) ▲	2020E EPS (€) ▲	2021E EPS (€) ▲	2020C EPS (€)	2021C EPS (€)
Current	ADD	5.4	0.336	0.341	0.330	0.350
Previous	BUY	5.1	0.329	0.340	-	-

Source: Intesa Sanpaolo Research estimates and FactSet consensus

Management presented the 2020-24 Strategy Plan. Snam's capex plan increased with a focus on network extension and costs savings, and expansion of the activities related to the energy transition (biomethane, hydrogen and energy efficiency). Dividend policy confirmed with 5% DPS growth up to 2022. On top of that, a 2.5% DPS growth in 2023-24

Snam - Key Data

27/11/2020	Gas Transportation
Target Price (EUR)			5.4
Rating			ADD
Mkt price (EUR)			4.69
Mkt cap (EUR M)			16283
Main Metrics (€ Bn)	2020E	2021E	2022E
Revenues	2.78	2.83	3.03
EBITDA	2.20	2.26	2.42
EPS (EUR)	0.34	0.34	0.37
Net debt/-cash	12.72	13.57	14.03
Ratios (x)	2020E	2021E	2022E
Adj. P/E	14.0	13.8	12.8
EV/EBITDA	11.6	11.5	10.9
EV/EBIT	17.8	17.8	16.7
Debt/EBITDA	5.8	6.0	5.8
Div yield (%)	5.3	5.6	5.9
Performance (%)	1M	3M	12M
Absolute	9.5	6.4	4.8
Rel. to FTSE IT All Sh	-6.1	-3.1	11.6

Source: FactSet, Company data, Intesa Sanpaolo Research estimates

Roberto Ranieri - Research Analyst [phone] [e-mail]

2	Intesa Sanpaolo Research Department

Equity Daily	27 November 2020

Strategy

Italian Equity Market

Equity Risk Premium and Risk-Free Rate Reduced

Equity risk premium lowered to 6.50% (from 7.25%). Note that from today we will use an equity risk premium of 6.50% in our equity valuation models (from our previous 7.25%). Our equity risk premium is based on a three-stageDDM, which calculates the equity premium implied in the Euro Stoxx index. As of end-November2020, our risk premium for the Euro Stoxx stood at 6.9%, with its 10Y average at 7.4%, its 15Y average at c. 6.9% and its 20Y average at 6.4%. We had reduced our indicator from 7.50% to 7.25% in early October, reflecting the lower perceived risks compared to previous quarters. Since then, however, we had positive newsflow about the availability of effective vaccines at the beginning of 2021, earlier than anticipated. This acted as a true game-changerfor equity investors, prompting a swift re-ratingin equity prices, since then. We anticipate that the higher risk appetite could strengthen in the coming months, anticipating an eventual way-outfrom the pandemic and a gradual normalisation going forward. Thus, we decided to bring our indicator more in line with its 20Y average, to reflect an ongoing positive shift in risk aversion.

Risk-free rate reduced to 0.75% (from 1.00%). We also lowered our risk-freerate to 0.75% in our equity valuation models, replacing the previous 1.00%. During the last six months, the average 10Y BTP yield was 1.02%, while the average of the last three months was 0.81%. The declining trend in BTP yields has accelerated in recent months, and the current 10Y yield is 0.58%. We have therefore decided to move downwards our risk-freerate parameter to a level more consistent with the current yield curve.

Equity Strategy

27/11/2020

Giampaolo Trasi - Head of Equity &

Credit Research

[phone]

[e-mail]

Intesa Sanpaolo Research Department

3

Equity Daily	27 November 2020

Company News

A2A (ADD)

MoU in Hydrogen

Market Mover

Positive

Neutral

Negative

What's up? Yesterday, through a press release, A2A announced to have signed a Memorandum of Understanding with EMS (Energy Management Services), the Italian investment platform of Ardian dedicated to renewable and innovative energy sources, for a cooperation in green hydrogen development and production. The idea underlying the agreement is to identify the most suitable sites to integrate existing or planned renewable power plants and hydrogen production units, and consequently launch and develop a pilot plant together.

What we think: While we appreciate A2A's commitment to energy transition, we do not expect the news to represent a driver for the stock.

A2A - Key Data

27/11/2020		Multi-Utilities
Target Price (EUR)			1.57
Rating			ADD
Mkt price (EUR)			1.31
Mkt cap (EUR M)			4099
Main Metrics (€ M)	2020E	2021E	2022E
Revenues	7,156.3	7,492.0	8,614.0
EBITDA	1,141.3	1,174.1	1,288.6
EPS (EUR)	0.09	0.09	0.11
Net debt/-cash	3,450.2	3,544.6	3,700.0
Ratios (x)	2020E	2021E	2022E
Adj. P/E	13.8	13.8	11.7
EV/EBITDA	6.9	6.8	6.3
EV/EBIT	14.2	14.3	12.7
Debt/EBITDA	3.0	3.0	2.9
Div yield (%)	6.1	6.4	6.7
Performance (%)	1M	3M	12M
Absolute	14.8	4.8	-23.6
Rel. to FTSE IT All Sh	-1.6	-4.6	-18.6

Source: FactSet, Company data, Intesa Sanpaolo Research estimates

Davide Candela - Research Analyst [phone] [e-mail]

Roberto Ranieri - Research Analyst [phone] [e-mail]

4	Intesa Sanpaolo Research Department

Market Mover: The indicators Positive/Neutral/Negative are the analysts' view on the market's possible reaction to the news in question. Intesa Sanpaolo's fundamentals-based12-month rating can be found in the key data table in the comment.