What’s it all about?
E.ON deserves credit for coming up with the idea of splitting conventional from new energy. RWE only followed, but then implemented a split without many of E.ON’s troubles. The only concern could relate to the timing of the IPO before the nuclear situation is resolved. We compare RWE AG (which retains a majority holding in Innogy for now) and Innogy. We also look at RWE once the majority of Innogy is sold (which we expect to happen). We recently published in-depth reports on both groups: RWE: Not out of exile (219pp) 5 October 2016, Innogy: Getaway car (196pp) 5 October 2016). With a EUR10 target price, we are sellers of RWE. Innogy will have its first trading day on Friday 7 October. With a EUR34 target
price, we would buy up to levels of EUR32, hold the shares between EUR32 and EUR35, and sell above EUR35 (pure income investors will probably disagree).