It is a pity that the new strategic plan of Terna was presented to the financial community precisely on Black Thursday on the stock exchanges but, as we know, when it pours on the market, distinguishing wheat from chaff becomes an improbable effort. The Great Crisis of 2007-8 taught us that the market is not always right and that indeed it was precisely the absurd ideological dogma on its infallibility, which is at the basis of ultra-liberalism, which caused havoc, because the market, like finance it is certainly not the devil's dung, as was claimed in the Middle Ages, but it is a world that can be dominated by angels or demons depending on the rules that govern it.
Usually, however, time is a gentleman and it is not the first time that excellent industrial plans (Sergio Marchionne knows something about them) have been welcomed by a wave of sales, only to be rehabilitated within a few days. In fact, Terna's plan deserves much more than what it collected in its debut where the stock - on a bad day - lost 3,7%. It's not the first time and it won't be the last that financial analysts reveal themselves to be short-sighted and that the perverse logic of the algorithms ends up emphasizing speculative drives, but Terna's plan deserved and still deserves far better luck.
Terna's new plan, presented by the CEO Luigi Ferraris in a highly symbolic place such as the Museum of Science and Technology in Milan, has everything to please the market and sooner or later it will, because it is not a simple business plan but is a real country-plan in the sense that it rightly places the electricity grid at the center of the transition towards the energy revolution which aims, through renewables and progressive decarbonisation, to offer Italy safer, cleaner and cheaper energy. This is why Terna's 2018-22 five-year plan is a turning point and for at least three reasons that must be carefully understood and valued.
It is a turning point because it marks a real discontinuity in the investment policy which increases by 30% and reaches a good 5,3 billion euros in Italy, more than half of which is destined for the development of the national grid and for interconnections with the abroad. But it is also a turning point because it makes sustainability its true compass, declining it under three profiles, namely that of systemic sustainability (which includes financial sustainability), that of environmental sustainability and that of social sustainability. Finally, it is a turning point because, by virtue of an expected growth in net profit of around 3% per year, it marks a clear increase in dividends with five-year visibility starting from a growth of 6% compared to the dividend pertaining to the financial year 2017 and then raise the payout to 75% for the years 2011 and 2012 with a guaranteed minimum dividend equal to the dividend pertaining to the financial year 2010.
Naturally, as in all particularly challenging plans, there are unknown factors and Terna's plan, beyond the regulatory aspects, has above all two. The first concerns the feasibility of the many projects that Terna has developed to implement the leap in quality of its investment strategy. Let's not forget that we live in the country of not doing, in the country dominated by Nimby syndrome like the tribulations of Tap sadly we are reminded every day that the vote of March 4 seems to have been made on purpose to exalt localisms and populisms that play against the national interest.
But Terna is betting on its ability to implement its projects by focusing on two jokers: the first – and it is a novelty that is rarely seen but which completely changes Terna's modus operandi – is that many of the works in the pipeline will be underground or submarine with a minimal or zero impact on the environment and the second is that, as Ferraris explained, Terna wants to adopt the policy of open dialogue with the communities and institutions, especially local ones, which will be affected by the electricity group's new projects.
Then there is the second unknown factor regarding the dividend policy, which is not entirely in Terna's hands. What will happen when the ECB's monetary policy changes? Quantitative easing is already winding down and in 2019 it is likely that in Europe, as is happening in the US, rates will rise again, but above all 2019 is the year in which Mario Draghi's enlightened presidency will end. This is why Terna's dividend policy is generous and prudent at the same time, but Ferraris is convinced that his group's dividend policy is highly sustainable both because the total dividends for the first two years are already in hand and because the generation of profits makes it possible to support the growth of the payout.
With its plan, Terna has therefore launched its heart beyond the obstacle, but now it's up to the market to realize this and sooner or later it will happen.
