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 7 research reports from 1 professional analysts.
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EDP-ENERGIAS DE PORTUGAL SA
EDP-ENERGIAS DE PORTUGAL SA
Positive restructuring of its portfolio and holding structure
29 Mar 17
EDP has taken two simultaneous decisions to perform a massive reshuffling of its portfolio. On one hand, it has accepted a binding offer for its gas distribution assets in Spain (Naturgas Energia Distribucion) for €2.59bn. The offer has been proposed by a consortium of investors comprising mainly JP Morgan Asset Management, Abu Dhabi Investment Council, and Swiss Life Asset Managers. The final agreement is expected to be signed in April 2017 with the transaction being closed in either Q2 or Q3 17 after regulatory approval. At the same time, on the other hand, it has issued a tender offer for the repurchase of the remaining shares in its renewable subsidiary EDP Renovaveis (EDPR) for €6.8/share in cash. The objective is to repurchase the 22.46% remaining stake in the company currently held by investors, while providing a 10% premium on the group’s previous closing of €6.2/share. This also represents a 10.5% premium on the 6-month average stock price of €6.15. The transaction is expected to be completed within the same timeframe as the Gas distribution transaction (Q2-Q3 17).
A hidden profit warning with no guidance upgrade?
03 Mar 17
The group has published its FY16 results with weaker than expected sales as they have decreased by 6% yoy to €14,595m. Following this, the reported EBITDA has decreased by 4% yoy to €3,759m, mainly due to one-offs incurred in 2015 (+€441m). However, on an adjusted basis, EBTIDA improved by 6% yoy to €3,698m due to a strong hydro performance and a 6% expansion in capacity. Higher financial expenses from the repurchase of high interest bonds has been more than offset by lower income taxes and minority interests from a weak performance in Brazil, leading net profit to increase 5% yoy. On an adjusted basis, net profit reached €919m which represents an 8% yoy increase, but is slightly below forecasts. Operating cash flows increased by 31% yoy to €4.04bn, mainly due to positive working capital levels. This has been enough to cover a 10% increase in investments, with 64.5% attributed towards growth and allowing free cash flows to finish in positive territory at +€159m. Net debt decreased by 11.7% yoy and is better than expected at €15.9bn. An improvement in equity levels of 8.4% yoy to €9.4bn and lower debt levels have reduced gearing to 169%. The group has proposed a dividend payment of €0.19/share in line with expectations, which represents a 3% yoy increase and a 72% payout ratio.
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.
The tide is turning
20 Apr 17
Any investor worth their salt knows it is impossible to precisely call a bottom in a particular stock. For Gattaca, though, we believe this moment has now passed given the compelling valuation (6.9x EV/EBIT vs 9.8x sector average), attractive 9.8% unlevered cashflow yield and constructive secular trends supporting its specialist markets. Sure, Net Fee Income (NFI) like-for-likes (LFL) have fallen of late, yet equally there are now early indications that organic growth may soon turn positive.
Panmure Morning Note 26-04-2017
26 Apr 17
The interims highlighted the dilutive impact of equity raise in November 2016 with profit before tax growing by 9% yoy but EPS growing by just 5% yoy. At end-February, the cash balance had reached £15m, of which £5.5m is earmarked for the completion of the new factory. As the company remains cash generative, we expect the company to end fiscal 2017 with just under £13m of cash. We eagerly wait to see how this cash will be invested and drive returns.
N+1 Singer - Small-cap quantitative research - Growth style screen revamp and 10 focus stocks
06 Apr 17
We have reviewed the performance of our consistent growth screen since the previous refresh on 27 September 2016 and revamped the selection parameters to focus more on forecast sales and EPS growth going forward. In the period under review the consistent growth style screen outperformed the small-cap benchmark by c. 6% and underperformed the microcap index by a similar amount. Interestingly, although growth doesn’t always seem to be defensive as might be expected, however it appears right to buy growth on dips caused by or coincident with wider market volatility. In the new forecast growth screen we take a close look at 10 focus stocks. We will monitor performance and refresh it in three to four months time.
N+1 Singer - Trifast - FY17 results ahead of expectations
20 Apr 17
Trifast has provided a positive year end trading update, with good performances across all geographies. Results for FY17 are guided to be ahead of expectations, with year end net debt also lower than previously expected. FY18 has also started well, although management has reiterated slight caution regarding margins due to rising input costs. We anticipate increasing our PBT forecasts by a mid-single digit percentage, and also reducing our net debt estimates. We remain positive on prospects for Trifast and expect the share price to respond positively today.