By Danilo Masoni
MILAN, Dec 1 (Reuters) - With only three days to go beforeItalians vote in a referendum that could tip their country intopolitical chaos, investors are trying to work out how to playthe ballot on the stock market.
The prospect that Prime Minister Matteo Renzi could stepdown if, as polls suggest, his constitutional reform is rejectedhave already triggered a sell-off in banking stocks, consideredas most vulnerable to political turmoil.
But domestic and overseas analysts alike are looking beyondbanks to other industries and individual companies that could beat the sharp end of the fallout from Sunday's vote, no matterwhich way it goes.
Heightened country risk and higher sovereign bond yields inthe event of a "No" vote could undermine capital-intensiveutilities and telecom companies with high debts, while thosecompanies that make most of their money overseas could be saferhavens.
Here are the top non-bank stocks and sectors to watch outfor on Monday when the market opens and possible implications ifthe "No" vote wins the day:
1) FERRARI AND THE OUTPERFORMERS
The luxury sports car maker is among global players likelyto suffer little impact from a marginal "No" vote, according toanalysts. Spun off from Fiat Chrysler at the start ofthe year, Ferrari has reported record earnings thisyear. The United States remains the largest single market forFerrari, with only a small portion of sales made in home marketItaly. Ferrari - and other luxury names - is cushioned by itsexclusive status, a growing number of customers from among thesuper rich, especially from Asia, and a waiting list for its topmodels of more than a year.
Among other companies with leading brands and limitedexposure to Italy, analysts mentioned fashion houses Moncler and Ferragamo and also cable maker Prysmian, packaging firm IMA and hearing aid makerAmplifon. "We would increase the exposure to highquality Italian equities on weakness but one should be preparedto take some short term pain," broker Mainfirst said.
2) UTILITIES AND REGULATION RISKS
Italy's biggest utility Enel, saddled with 36.8billion euros ($39.00 billion) of net debt, is sensitive torising sovereign bond yields that prompt higher refinancingcosts and make dividend yields less attractive. HSBC analystssaid a "No" vote could also fuel worries about tougherregulation and even windfall taxes like the 2008 'Robin HoodTax' that battered the sector before being declaredunconstitutional last year. More exposed to such risks are pureregulated utilities like grid players Snam, Terna and Italgas which juggle with high debt butwhich, unlike Enel (that gets more than half its earningsabroad), have nearly all their business in Italy.
State-controlled Enel could also face top managementuncertainty should any new government opt to replace current CEOFrancesco Starace and could face challenges to plans to roll outan ultrafast broadband network nationally. Political uncertaintycould also derail Rome's plans to make the fragmented localutility sector more efficient by encouraging larger regionalplayers like A2A, Acea, Hera and Iren to buy out smaller rivals. "The Renzi government haslong been a supporter of the need for consolidation in the localpublic services sector ... and a no vote would be bad news onthis front," broker Intermonte said.
3) TELECOM ITALIA AND BROADBAND UNCERTAINTY
Italy's biggest phone group, burdened with 26.7 billioneuros of net debt, could also be hit by rising bond yields andmacroeconomic uncertainty but to a lesser extent than utilities.Its high leverage puts it among the most exposed if there is a"No" victory. Some analysts expect Italy to stick with plans toroll out an ultrafast Internet network across the country. Thishas favoured a rival project launched by utility Enel,heightening competition for the former phone monopoly, which isalso betting on broadband for growth. But other analysts believea leadership change in Rome could help Telecom Italia and itsbroadband joint venture partner, Swisscom unit Fastweb."For Telecom Italia the negative impact from macro could bepartly offset by a reduced threat from Enel," Deutsche Banksaid. Any reduced support for Enel's broadband ambitions couldalso impact Vodafone and VimpelCom's Wind, whichhave committed to using Enel's fibre network.
4) ENI, THE RESILIENT PLAY
Italy's biggest listed company is seen as a resilient playsince it has most of its business outside Italy and respondsfirst and foremost to the vagaries of the oil price, boostedthis week by OPEC's agreement to curb oil output. "Energy islikely to be resilient to a "No" vote given its global nature,"HSBC said.
But a redrawing of political lines in Rome could threatenCEO Claudio Descalzi whose strategy to focus thestate-controlled oil company on upstream work has been welcomedby the market. His position comes up for reappointment nextApril-May. State-controlled oil service company Saipem has problems of its own from the tough conditions in itsindustry. But it could also find higher sovereign bond yields aheadache as it presses ahead with refinancing debt after itsdivorce from former controlling investor Eni.($1 = 0.9436 euros)
(Reporting by Danilo Masoni, Stephen Jewkes and Agnieszka Flak;Editing by Jamie McGeever and Jane Merriman)
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