Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on EDP-ENERGIAS DE PORTUGAL SA. We currently have 5 research reports from 1 professional analysts.
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EDP-ENERGIAS DE PORTUGAL SA
EDP-ENERGIAS DE PORTUGAL SA
First view: the positive path continues
04 Nov 16
The group has released a good set of 9m figures which confirmed its positive path. EBITDA for the quarter fell 4% to €826m but is still slightly above market expectations, while adjusted EBITDA for the 9m rose 10% yoy to €2,836m mainly driven by improving conditions in Iberia and Brazil. Following the same path, a 13% decrease in net interest expenses has helped adjusted net income to increase by 17% yoy to €667m which is in line with expectations. On a reported basis, consolidated EBITDA fell by 3% yoy to €2,893m but this is mainly due to one-offs such as the 50% acquisition of a hydro power plant in Brazil (+€295m), the disposal of gas assets in Spain and non-recurring items in the renewable business (EDPR). Moreover, on a reported basis, operating profit decreased 7% yoy mainly due to higher depreciation expenses from an increase in the installed capacity. Also, there was a 27% yoy increase in taxes, as the effective tax rate has been raised from 19% to 26%, since the disposals booked in Q3 15 had no impact on taxable income and created a negative effect on the yoy comparison. As a result, reported net income fell by 16% yoy to €615m, while adjusted for one-offs it increased by 17% yoy.
Guidance upgraded after outstanding adjusted first-half performance
29 Jul 16
EDP published half year results which were in line with expectations, with EBITDA decreasing 3% yoy to €2,067m and operating profit reaching €1,327m, down 8% yoy due mainly to €744m of impairment charges. Moreover, higher financial expenses (+12% yoy) and a higher effective tax rate (at 27% vs 18% previously) have plunged the attributable net profit of the group to a 20% yoy decrease to reach €472m, below the €482m expected by the market, which has been partially offset by lower minority interests (specially on the Brazilian side of the business as this decreased 59% yoy). On the other hand, operating cash flows increased by 15% yoy to €2,208m mainly driven by a positive contribution in regulatory receivables, where a 2% decrease in capex, a 7% increase in dividend payment added to a 57% decrease from financing activities have allowed the group to maintain a positive free cash flow during the period, reaching €175m. The positive cash flow results added to lower regulatory receivables have allowed the company to reach a 5% yoy decrease in net debt to €16.48bn. Following the results and just before the conference call, EDP has decided to raise its FY guidance, with EBITDA expected at €3.75bn (vs €3.6bn), net profit of €950m (vs €900m) and a net debt of €16bn (vs €16.5bn). Moreover, it expects a moderate improvement in the 2017 outlook following recent moves on energy prices and credit/forex markets.
A BRL1.5bn capital increase for its Brazilian subsidiary
03 May 16
Doubts about the group’s Brazilian exposure have been confirmed as the company has approved a capital increase for its Brazilian subsidiary EDP – Energias do Brasil (EDPB). The capital increase of BRL1.5bn has been set at a share price of BRL11.5, a 6% discount over the 30-days trading average, by issuing 130.43m new ordinary shares. EDP has committed itself to subscribing the total number of shares it is entitled to (51%), which represents an investment of BRL765m (c.€191m at a 4.0 EUR/BRL exchange rate). The objective of the transaction is to strengthen the subsidiary’s balance sheet, while reinforcing EDP’s long-term commitment with the Brazilian market.
Attractive asset rotation portfolio and receivables transactions for cash generation purposes
21 Apr 16
EDP has reached an agreement with Vortex to sell a 49% equity shareholding stake in a portfolio of 664MW of renewable fully-owned wind onshore assets. Vortex is a fund led by EFG-Hermes, which includes investments from the Gulf Cooperation Countries (GCC); in other words, it is the renewable platform managed by the Egyptian bank’s equity arm. The transaction includes wind capacity within four European countries (Spain, Portugal, Belgium and France) with a 4-year average lifetime. In addition to fully operational wind farms, the agreement also includes 24MW of wind capacity currently under development in France (with the required investment needed for them), which is expected to be completed by Q2 16. EDP has also signed the sale for €700m of the 2015 regulatory deficit linked to the special regime concerning the over-costs paid for energy. The group has been selling the yearly tariff deficit since 2008 under its monetisation of regulatory receivable programme.
Initiation of coverage.
21 Mar 16
Energias de Portugal (EDP) is a vertically-integrated utility company, and the biggest Portuguese industrial group with a €10.9bn market cap. EDP is the largest generator, distributor and supplier of electricity in Portugal with significant operations in Spain. It is the third largest producer of wind energy in the Iberian Peninsula and one of the largest in the world. In terms of market share for electricity in Spain (generation, regulated and retail), EDP is behind Endesa (1st) and Iberdrola (2nd), while it also has a significant presence in the gas sector. The group has a highly regulated business structure as 80-85% of its earnings come from either regulated or semi-regulated activities such as networks, renewables with Feed-in-Tariffs (FiT) and conventional generation with Power Purchasing Agreements (PPA). However, its regulated exposure is expected to decrease in the coming years to around 70% as deregulation starts in Portugal and conventional assets under development and not covered by PPAs are commissioned. The group’s main operations are located in Portugal, Spain, Brazil, and the US with some other renewable projects in additional European countries (France, Belgium, the UK). Overall, the group has a well-diversified generation portfolio, where 70% of its power generation comes from renewable sources (including hydro) and 17% in gas assets to cover renewable volatility, positioning the group within the top ranking companies in the energy transition faced by the European power market. Main drivers The growth objective of the group is quite ambitious as it targets a 5% CAGR on earnings from 2015 onwards and a 7% CAGR on EPS. We apply more modest growth than these expectations due to its exposure to the Brazilian economy (17.5% of revenues, 17% of earnings and 10% of debt), the slowdown in European renewable capacity, and an increasing exposure to power price movements (and its downward trend) as it moves towards a more deregulated model. We believe the next trigger will come from the release of the detailed FY15 accounts and from the capital markets day presentation when we should see the impact of the slowdown of the Brazilian economy on future expectations, and also guidance confirmation of its ambitious growth potential. It will also be useful to know the position of China Three Gorges (CTG) once the lock-up on its holding expires in the same month. We initiate coverage of EDP with a positive view, although with an Add recommendation backed by a limited upside potential as the company has taken a positive path to follow, but some of its top-line growth may be lost due to minorities and dividend payments (especially to its subsidiary EDP Renováveis), in addition to short-term uncertainty on CTG’s position once the lock-up ends.
Exceptional trading continues
08 Nov 16
Keywords has announced that the strong trading in localisation and audio services has continued into H216. In particular, the Synthesis business acquired in April continues to benefit from exceptionally strong trading. Full-year results are now expected to be materially ahead of consensus and we upgrade our FY16e EPS by 13%. Erring on the side of caution, we have not changed our FY17 estimates significantly. Nevertheless, we believe the company does have a platform to sustain double-digit earnings growth, and hence medium-/long-term prospects for further share appreciation remain good.
08 Dec 16
Elderstreet stake acquired 02 GENERAL NEWS Globalworth premium In this issue Venture capital firm Draper Esprit has taken a 30.8% stake in venture capital trust manager Elderstreet. Both investment managers focus on the technology sector and they will be able to co-invest. Elderstreet has investments in a number of AIM-quoted companies through its VCTs. The purchase was funded by an issue of Draper Esprit shares worth just over £250,000. Simon Cook, the chief executive of Draper Esprit, is a former partner at Elderstreet so he knows the business and the people who run it, although he did leave more than 14 years ago. Cook has previously acquired portfolios from 3i and Cazenove, two other firms where he has worked. Draper Esprit has an option to acquire the remaining shares in Elderstreet, which has more than £25m under management. Adding Elderstreet to the group enables Draper Esprit to offer investors a range of EIS funds, VCTs and an ISA qualifying listed evergreen patient capital fund. The enlarged group has venture capital assets under management of more than £350m. At the end of September 2016, Draper Esprit had a net asset value of 352p a share, which is similar to the current share price. The June 2016 flotation price was 300p a share. Draper Esprit is quoted on Ireland’s Enterprise Securities Market as well as AIM.
Focused on the long term
08 Dec 16
These are rare events but it is nice to see a management use its public listing advantageously to trade short-term dilution in EPS for the optionality of asymmetric upside in the long term. With over £10m already in the balance sheet, ABD has successfully raised £5.4m gross in a placing and expects to raise another £1m from an offer. We were not surprised to learn that the placing was over 3.5x oversubscribed. How many listed UK companies are positioned to take advantage of the digital revolution in the automotive industry? The additional investment in new people, facilities, products & services should be dilutive to FY2017-18 EPS but this is small price to pay to establish the leading supplier of integrated test, measurement and simulation solutions to the autonomous vehicle industry. Our forecasts assume that growth will accelerate from FY2019. We raise our target price to 575p based on 15x FY2019 EPS, equivalent to Ricardo, the only other UK stock which has embraced the optionalities offered by the technological changes in the automotive industry.
07 Dec 16
Severfield’s (SFR’s) H117 results were well ahead of the previous year; margin performance and order book development cause us to raise our FY17 profit expectations. This combination has also proved to be a catalyst for share price outperformance following the results. Revenue growth and further margin development towards management’s stated aim of doubling FY16 PBT by 2020 can sustain further progress.
N+1 Singer - Waterman Group - Encouraging AGM statement in line with expectations
09 Dec 16
This morning’s AGM Statement confirms that trading in the first four months of the year to 31st October was in line with expectations. Revenue was slightly above the prior year period and cash collection has remained strong. The Group has reiterated its commitment to maintaining a progressive dividend policy. The statement is encouraging and we therefore leave our forecasts unchanged. We note the attractions of a 5% dividend yield and consider the shares inexpensive at 4.5x FY’17 EV/EBITDA.