Rubis (RUI:EPA) - A Deep Value Infrastructure Play - TP: 60 EUR📌 Investment Thesis
Rubis is a small-cap European energy distributor undergoing a strategic transformation. Traditionally focused on downstream oil and gas distribution, the group divested its storage business in 2023 and has since begun allocating capital into renewable electricity generation in France, Italy, and Spain. This pivot is supported by favorable EU and French regulatory frameworks designed to accelerate decarbonization.
Despite several years of share price weakness, 2024 saw the entry of heavyweight French industrial investors:
• Vincent Bolloré acquired ~6% of shares.
• Patrick Molis’ Compagnie Nationale de Navigation (CNN) holds ~9%.
Their presence and reshffling of the management Board validates Rubis’ new strategic direction and strengthens its long-term shareholder base.
📈 Technical check
After several years in a pronounced downtrend, Rubis shares have been building a base since the second half of 2023. Early 2024 marked the initiation of a trend reversal, confirmed by higher lows and improved momentum indicators. The stock is currently trading well below its 2018 all-time high of ~€65, but the technical setup suggests that, upon confirmation of the reversal, Rubis could progressively retrace back toward those levels. A sustained break above resistance in the mid-40s would open the path to a multi-year recovery cycle, in line with the company’s strategic repositioning.
🌍 Macro Backdrop
• European equities regain traction: After years of underperformance, Europe returned to the spotlight in 2024, benefiting from capital rotation out of US mega-caps and geopolitical shifts under the Trump administration.
• Energy security meets energy transition: The EU seeks to balance renewable capacity growth with hydrocarbon reliability. Rubis straddles both worlds.
• Valuation support: European energy mid-caps continue to trade at a discount versus US peers, making Rubis attractive for contrarian investors.
⚡ Strategic & Financial Drivers
1. Shift to Renewables – Through its subsidiary Photosol, Rubis already operates 535 MW of solar capacity with a pipeline exceeding 3 GW, targeting 3.5 GW in operation by 2030.
2. Stable Downstream Franchise – Distribution of LPG, fuels, and bitumen across 40+ countries remains a resilient, cash-generating core. EBITDA for the fill FY2024 was €730m, with the distribution business ("retail and Marketing) accounting for 95% of it..
3. Dividend Aristocrat Status – Rubis has increased its dividend for 28 consecutive years, delivering an impressive 8% CAGR in dividend per share (DPS) over the past decade. With a forward yield of ~7.2% by 2026, it ranks among Europe’s most attractive income stocks .
4. Strong Financials – Historical EPS CAGR of 9% over 10 years, >100% free cash flow conversion (2011–2021), and conservative leverage (<2x corporate net debt/EBITDA) ensure balance sheet resilience .
5. Influential Shareholders – Bolloré and CNN’s stakes provide confidence in governance and long-term optionality.
🚨 Risks
• Execution risk in scaling renewables profitably.
• Structural long-term decline of oil & gas distribution volumes.
• Regulatory and taxation headwinds on fossil fuels in Europe.
• Delay in commercial operation of solar plants
🧭 Conclusion
Rubis combines the resilience of a cash-generating downstream franchise with the growth optionality of renewables, backed by a 28-year record of dividend growth. Trading at a discount to peers (p.e. of 8.6x), with a forward yield of 7%+ and validation from industrial shareholders, Rubis stands out as a contrarian long-term income and transition play in European infrastructure.
