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雷达卡
We are not bullish on electric utilities for 2010. Although the sector might
benefit in 2010 from a recovery in electricity demand growth, it continues to be
less exposed to a high-growth cycle in Brazil than other cyclical industries.
With the sector offering an average upside to our 2010YE price targets of only
9%, we believe that investors need to be selective and look for stocks that
could benefit the most from a recovery in demand growth, the election process
and selected expansion opportunities (e.g., auctions for new projects and M&A
transactions).
• Top picks: State-owned utilities CPLE6/ELP and CMIG4/CIG, transco
TRPL4, genco GETI4 and private-owned integrated utilities ENBR3 and
EQTL3. Please see pages 11 to 24 for a summary of the stock price drivers and
valuation and risks analysis for all stocks under our coverage.
We believe that the main stock price drivers for the sector until 2010YE will be:
• Recovery in electricity demand growth. Although demand remains weak
YTD in Brazil, we believe that 5.0% GDP growth will trigger a recovery in
2010. We see ST benefits for distribution companies, but we remain skeptical
about a relevant improvement in the outlook for LT energy prices in the free
market that could boost the stock price performance of gencos.
• 2010 elections. We believe that the uncertainty regarding the level of political
influence in state-owned companies that comes with the election cycle might
create buying opportunities in the sector. We expect a benign election outcome
for CPLE6/ELP and a neutral (and low-risk) outcome for CMIG4/CIG. We
remain concerned about political influence on ELET3/EBR, ELET3/EBR.B.
• Concession renewal risk. Although the government might start the discussion
around this issue in 2010, we remain skeptical that a solution will be reached
before the elections. We believe that the market prices in a renewal of the
generation concessions with a ~R$65/MWh cap price, and under this scenario
we see no further upside for CESP6 in 2010.
• Auctions for new generation and transmission projects. At least 4 auctions
should happen in the next 6 months to sell new generation and transmission
projects in Brazil. As we expect tight implied ROEs coming from high
competition, we believe that auctions represent a risk and an opportunity at the
same time. In our view, these events could be a major driver for CMIG4/CIG,
TBLE3, ELET3, ELET6, MPXE3, TRPL4 and ENBR3.
• Consolidation in distribution. Due to a fragmented distribution market with
several opportunities for synergy gains, we expect to see consolidation. While
CMIG4/CIG should be the main consolidator, the main consolidation targets
could be ELPL6, EQTL3, LIGT3 and GETI4, in our view.
• We are establishing 2010YE price targets. See page 3 for details on our
recommendations, stock price drivers, price targets and valuation multiples.
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