*Adcap Equity | Transener (TRAN) - Initiation of Coverage - Hold for Now, Awaiting RQT Certainty (TP: ARS 2,900 | HOLD | Upside: +15%)* Link to report: https://tinyurl.com/AdcapTRAN-IoC-4Feb2025 We initiate coverage on *Transener (TRAN)* with a *HOLD* recommendation and a *YE25 target price of ARS 2,900*, implying a *15% upside*, including an expected *4.3% dividend yield*. *Our investment thesis is based on:* ✅ *Improving Regulatory Framework:* Recent tariff hikes (+260% in 2024 vs +118% inflation) and automatic monthly adjustments are positive. However, the upcoming five-year tariff review (RQT), expected by March 2025, remains crucial for long-term profitability. ✅ *Strong Cash Flow & Dividends:* We forecast 60% EBITDA margins and USD 425M in FY25 revenue, with dividend yields rising from 4.3% in 2025 to 7-9% in later years. ✅ *Debt-Free Position:* Strong liquidity supports dividends and potential future investments. *Key Risks & Challenges* ⚠️ *Regulatory WACC Reduction:* The RQT may cut WACC to 6.1% from 10.14%, impacting valuation. However, we expect tariffs to return closer to 2017 levels. ⚠️ *Investment Needs:* Transmission capacity lags behind demand, requiring a USD 10B public-private investment over the next decade. The AMBA I expansion could boost revenues by 3-5% if funded. ⚠️ *Scenario Analysis:* In our most optimistic case, AMBA I approval and tariff compensation could drive ARS 3,700 (+46%) valuation. In a worst-case scenario of tariff delays and devaluation, valuation could drop to ARS 1,300 (-46%).