Stock Analysis & Valuation Romande Energie Holding S.A. (HREN.SW)

• Previous Close: CHF1,275.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	64.82	-95
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Romande Energie Holding SA (HREN.SW) is a leading Swiss renewable energy company specializing in the production, distribution, and marketing of electrical and thermal energy. Founded in 1901 and headquartered in Morges, Switzerland, the company operates a diversified portfolio of renewable energy sources, including hydroelectric, solar, wind, and biomass plants. Romande Energie also manages critical infrastructure for electricity and fiber optics distribution, supporting Switzerland's transition to clean energy. The company provides comprehensive energy solutions, including customer-centric services like invoicing and call-center operations, positioning itself as a key player in Switzerland's sustainable energy landscape. With a strong focus on innovation and sustainability, Romande Energie plays a pivotal role in the country's renewable utilities sector, contributing to energy security and environmental goals.

Investment Summary

Romande Energie Holding SA presents a stable investment opportunity within the renewable utilities sector, supported by its diversified renewable energy portfolio and strong market position in Switzerland. The company's low beta (0.19) indicates lower volatility compared to the broader market, appealing to risk-averse investors. With a solid net income of CHF 212.3 million and a diluted EPS of CHF 8.28 in FY 2023, the company demonstrates consistent profitability. However, investors should note the significant capital expenditures (CHF -185.9 million), reflecting ongoing investments in renewable infrastructure. The dividend yield, based on a CHF 1.44 per share payout, may attract income-focused investors, though the sector's regulatory environment and energy price volatility pose potential risks.

Competitive Analysis

Romande Energie Holding SA benefits from a strong regional presence in Switzerland, with a vertically integrated business model encompassing energy production, distribution, and retail services. Its competitive advantage lies in its diversified renewable energy mix, particularly its hydroelectric assets, which provide stable, low-cost generation. The company's focus on infrastructure development, including fiber optics, adds a growth dimension beyond traditional utilities. However, its regional concentration in Switzerland limits geographic diversification compared to larger European peers. Romande Energie's smaller scale may restrict its ability to compete on cost efficiency with multinational utilities, but its deep understanding of the Swiss market and regulatory framework provides a defensive moat. The company's commitment to renewable energy aligns with Switzerland's ambitious climate goals, positioning it favorably for long-term growth in the energy transition.

Major Competitors

• Alpiq Holding AG (ALC.SW): Alpiq is a major Swiss energy company with a broader European presence, offering generation, trading, and energy services. Its larger scale provides cost advantages, but it has less focus on renewable infrastructure development compared to Romande Energie. Alpiq's international exposure introduces higher market risk.
• Axpo Holding AG (AXPO.SW): Axpo is Switzerland's largest renewable energy producer with significant hydro and nuclear assets. Its size and trading capabilities give it strong market power, but its nuclear exposure presents long-term transition risks absent in Romande Energie's pure renewable portfolio.
• BKW AG (BKW.SW): BKW operates across energy, infrastructure, and services with international renewable projects. While more diversified geographically, BKW has higher exposure to conventional energy than Romande Energie. Its engineering services division provides additional revenue streams.
• Engie SA (ENGI.PA): Engie is a global energy giant with substantial renewable assets. Its scale and international footprint dwarf Romande Energie, but the Swiss company's local market expertise and pure-play renewable focus offer differentiation in its home market.