美國電力公用事業(yè)Q4預(yù)覽：擁擠的公用事業(yè)行業(yè)變得挑剔

1、23 January 2019 Americas/United States Equity Research Electric UtilitiesElectric UtilitiesResearchAnalystsMichael Weinstein,ERP212 3250897 HYPERLINK mailto:w.weinstein w.weinsteinKhanh Nguyen,CFA212 5383524 HYPERLINK mailto:khanh.l.nguyen khanh.l.nguyenMaheepMandloi212 3252345 HYPERLINK mailto:mahe

2、ep.mandloi maheep.mandloiQUARTERLY4Q Preview: Getting Picky in a Crowded Utility TradeWith 4Q earnings season upon us, weve downgraded BKH (to Neutral) and SR (to Underperform), both on valuation, after strong outperformance as we highlight our sector call for 2019: Despite recent underperformance,

3、regulated utilities still trade 13% expensive vs the broader market on a relative P/E basis vs the SPX based on correlation to our CS House Call for a 3.3% 10-Year yield in 12 months. This is about where they were in early December when we published our HYPERLINK /s/V7eg3J4AF-Yp3E 2019 Outlook.We co

4、ntinue to recommend Integrated utilities with non-regulated exposure over purely regulated names as the sector re-ratesdownward. In 4Q reporting, expect a positive discussion from NEE downplaying the impact of a rate complaint and the recent announcement of a massive $10B regulated solar program pro

5、posal for Florida. We also expect a more or less neutral update from EXC as the company updates its capital plan, hedging program, and utility long-term guidance. We expect CNP to raise its capex plan 5%-10% and discuss combined company guidance once the merger with VVC closes.At the regulated utili

6、ties, we continue to highlight transmission and grid modernization as positive growth catalysts.Our top picks include ES, DUK, CMS and NI, with all except CMS initiating 2019 guidance on their 4Q calls (dont expect any surprises though) and ES and DUK updating capex plans for increased grid moderniz

7、ation work. We continue to see NI as a bargain after the unfortunate incident in Lawrence, MA in Sept 2018. We dont think NI will issue incremental equity for the incident though, nor do we think the company will change long-term 5%-7% annual EPS growth guidance. We keep our Outperform rating on PNW

8、 and are not too concerned over the recent appointment of Commissioner Burns as Chair. On the contrary, we expect Commissioner Kennedy to help move the discussion on renewable development productivelyforward.For the Underperform names, we see some improvement on hiring atSOs Vogtle project and an in

9、-line 2019 guidance range based off theoriginal (lower) midpoint of 2018 guidance. For ED, we continue to highlight exposure to PG&E through its above-market renewable contracts and see 2019 consensus as too high, likely due to mixed analyst treatment of HLBV accounting for the recently acquired Sem

10、pra portfolio. DTEs rating continues to reflect a pricey valuation rather than the strong regulatory environment they continue to enjoy inMichigan.Earnings Summary:DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE S

11、TATUS OF NON-US ANALYSTS. US Disclosure: Creditto do in its As a be have a of of as a in CMS: In-line 4Q18 $0.40. A warm summer boosted 2018, with 2019 guidance introduced on the 3Q call in-line with our 6%-8% EPS growthexpectation. Expect a slight reduction to 2019 ATM equity needs as a result of c

12、ash collected during delayed tax reformimplementation.DTE: In-line 4Q18 $0.92. DTE already initiated a solid early 2019 outlook on the 3Q call of $6.15 ($5.97-$6.33) which is slightly above the midpointofunchanged 5%-7% long-term growth off $5.78 original guidance for 2018. Underperform rating refle

13、cts valuation after a solid 3Q report and long-term update at EEI, as well as delays for contracting the remaining 1/3 of Nexus.ES: In-line 4Q18 $0.76. We expect initial 2019 EPS guidance range of$3.40-$3.50, which is in-line with consensus $3.48 and CS $3.44 andconsistent with 5%-7% growth off a 20

14、17A base of $3.11, which we expect to stay at 5%-7% but be rebased off 2018 results. Also expect a higher capex forecast from the roll forward of current $7.1B 2018-2022.NWE: An in-line 4Q $1.04. and FY 2018 $3.35 vs consensus $3.37 at the low end of 2018 guidance as previewed by management. Also, e

15、xpecta 1x $7M write-off associated with the recently announced tax settlement in Montana. Guidance for 2019 on hold with ratecase in progress. We dont expect guidance until after the MT ratecase is finished (June 30 final order), with the 2Q earnings call in July/Aug a possibility. We do expect a fi

16、ve- year capex update on this Feb call, although generation spending in Montana will likely be bracketed in a range given the Electricity Resource Procurement Plan (ERPP) draft filing isnt due until March 15, with RFP outcomes still a question mark. No update to 6%-9% total return guidance until we

17、get more clarity on the ratecase and/or theERPP.SO: For 2018, the company has already projected top end (or better) results vs 2018 guidance (top end $3.05) vs CS $3.05 andconsensus$3.00. However, given favorable weather this year and the impact of various asset sales (Gulf Power, etc.) and reduced

18、equity issuances (vs original guidance) long-term 4%-6% EPS growth guidance remains based off the $2.87 midpoint of 2018 guidance, which we think will still be the baseline for long-term guidance at this update (unchanged). For 2019, we expect a range of $2.98-$3.04 vs CS 2.96 and consensus $3.02. A

19、lso, nuclear hiring going better than expected in December/January and management thinks they are back on track for an April 2021 Unit 3 in- service.VST: Dont expect any change to 2019 guidance in the winter (already released on the 3Q call). Expect 4Q18 EBITDA of $762M and FY2018 of$2,831M vs conse

20、nsus $2,751M and guidance $2,750M-2,850M. Changes are more typical after summer peak periods. Instead we expect an update on OPI progress and merger integration, with an update on DYN plant rationalization in Summer 2019.EXC: Expect an in-line 4Q18 $0.58 and FY 2018 $3.13 vs consensus$3.12. Recall t

21、hat strong 3Q18 results gave management confidence inraising the midpoint of 2018 guidance $0.08 to $3.13 ($3.05-$3.20 from the prior $2.90-$3.20). For 2019, we expect an initial guidance range of $3.00-$3.30, in-line with our $3.14 and consensus $3.17. Also expect an uneventful roll forward for uti

22、lity plus holdco to 2023 and an update to ExGen hedging guidance.BKH: Downgrade to Neutral on valuation and slightly less bullish tone from new management. Specifically, BKH is now targeting long-term “above-industry-average” EPS growth starting 2020 (vs the prior “top tier” growth that is estimated

23、 7%). 2019/20 guidance already initiated, reaffirming LT growth expectation. On 3Q18 call, management initiated 2019 guidance of$3.35-3.55 (vs. CS $3.41 and consensus $3.42). For 2020 and beyond, management now guides to “above average” growth, with initial 2020 earlyguidance in-line with expectatio

24、ns at $3.50-3.80 vs CS $3.66 and consensus $3.65.CNP: Expect an in-line standalone 4Q $0.35 and FY 2018 $1.59 vs consensus $1.59. CNP will exclude both costs to achieve the mergeraswell as the dilutive impact of shares already issued for the transaction. Expect CNP to initiate 2019 guidance $1.65-$1

25、.75 vs CS and consensus$1.69. CNP continues to project total EPS of $1.76-1.98 for the combined CNP/VVC entity. Five-year capex plan (2019-2023) set to increase 5-10% vs prior plan.ED: Expect an in-line 4Q $0.74 and FY2018 at $4.28 vs consensus $4.26. 2019 guidance could disappoint on mixed consensu

26、s due to renewablesaccounting. We expect a range of $4.10 to $4.30 vs CS $4.21 and consensus $4.32. Note that we include the (guided) effect of a -$55M HLBV accounting (as well as dilution from an incremental $715M equity) for the SRE renewables purchase last year. CEB business heavily exposed to PG

27、&E: EDs renewable energy assets at 29% of MWs (both before and after the recent 981-MW Sempra portfolio purchase). The average PPA rate is $197/MWh, significantly above market rates. This places $0.04 EPS (1%) at risk if PPAs are reduced $10/MWh, or $0.16 (4%) at risk if above- market PPA is reduced

28、 by $40/MWh, or $0.66 (16%) at risk if the contracts were reduced to market at$30/MWh.DUK: Expect an in-line 4Q18 $0.89 and FY2018 $4.75 vs consensus$4.76. For 2019, we expect initial guidance of $4.80-$5.10 in line with CS$4.93 and consensus $4.96. Management has been pointing toward the low-end of

29、 the 4%-6% CAGR based off $4.60 (original guidance) in 2017, implying $4.98 for 2019. ACP delays in the US Fourth Circuit, but support continues from US Agencies. We take note of continued support from the US Fish & Wildlife and National Park Services as the Courts concerns had been repeatedly addre

30、ssed throughout 2018, so we expect them to be addressed once again.NEE: Expect a beat 4Q18 $1.61 and FY2018 $7.83 vs consensus $7.75 and company guidance $7.45-$7.95. We do not expect any changes tothe2019-2021 guidance ranges that have already been disseminated, and which already include $0.15 and

31、$0.20 of accretion in 2020 and 2021, respectively, for the Gulf Power transaction. We do expect more discussion of the “30 x30” plan announced on Jan 16 to install 30M solar panels in Florida by 2030 under a proposed $10B regulated program.NI: Guidance for 2019 will be provided on the 4Q call, and w

32、e expect a range of $1.32-$1.38, in line with our $1.35 and consensus $1.34. Expecta long-term capex update, 2019 guidance in line with unchanged 5%-7% annual EPS growth guidance, more details on the IRP, RFP, and the generation replacement strategy, with wind plant CPCN filings likely filed before

33、the call (a much fuller update will be given at an analyst day later this year). We expect equity to resume a more normalized annual pace in 2019 of $200M-$300M through a new at-the-market (ATM) shelf plus another $35-$60M employee plans. The timing of equity issuance in 2019 is likely dependent on

34、the timing of liability and property insurance recoveries for the Massachusettsincident.PNW: Maintain Outperform as not too concerned over Commissioners Burns, Kennedy. Expect an in-line 4Q18 at $0.20 and FY 2018 at $4.51 vsconsensus $4.48 and company guidance of $4.35-$4.55. PNW has already initiat

35、ed 2019 guidance of $4.75-4.95 vs CS $4.85 and consensus $4.75,9% over 2018 guidance midpoint. We continue to expect a material increase in solar investment within the Integrated Resource Plan (IRP) filing inApril.WEC: Expect a slightly weak 4Q on pension costs at $0.62and earningssharing, resulting

36、 in FY2018 at $3.32 vs consensus $3.33. Solid guidance for 2019 was already rolled out Dec 6 with the dividend increase decision. A 2019 forecast of $3.48-$3.52 vs CS 3.47 and consensus $3.51 is slightly above the long-term guided trajectory of 5%-7% CAGR based off an updated $3.28 guidance midpoint

37、 for 2018. On the 3Q call, management stated that the 5-year capex update supports a “l(fā)ow-6%s” EPS CAGR. Wisconsin electric ratecase filing expected by April 1, 2019; request to be modest, in themid-single-digits.Figure 1: Estimates CS andConsensusCompanyTicker4Q18 EPS4Q18 Cons.% Diff2018 EPS2019 EP

38、S2018 Cons.2019 ConRatingTPPinnacle WestPNW$0.20$0.1811.54%$4.51$4.85$4.48$4.83O$93NextEra EnergyNEE$1.61$1.544.49%$7.83$8.38$7.76$8.41O$189Northwestern CorpNWE$1.04$1.003.32%$3.35$3.50$3.38$3.41U$60NisourceNI$0.37$0.362.69%$1.28$1.35$1.28$1.34O$29CenterpointCNP$0.35$0.342.47%$1.59$1.69$1.59$1.70O$3

39、1Eversource EnergyES$0.76$0.751.92%$3.28$3.44$3.27$3.49O$70Exelon CorpEXC$0.58$0.571.59%$3.13$3.14$3.12$3.17O$49Black Hills CorpBKH$0.93$0.920.73%$3.42$3.41$3.42$3.44N$66DTE EnergyDTE$0.92$0.92-0.31%$6.32$6.20$6.32$6.23U$110Southern CompanySO$0.23$0.23-0.32%$3.05$3.00$3.04$3.02U$45CMS EnergyCMS$0.40

40、$0.40-0.41%$2.34$2.52$2.34$2.50O$55Duke EnergyDUK$0.89$0.89-0.73%$4.75$4.93$4.75$4.96O$89SpireSR$1.28$1.30-1.19%$3.73$3.75$3.72$3.78U$72Consolidated EdisonED$0.74$0.75-1.88%$4.28$4.21$4.30$4.31U$77WEC EnergyWEC$0.62$0.64-2.01%$3.32$3.51$3.33$3.51N$71VistraVST$762$915-16.74%$2,831$3,300$2,812$3,334N$

41、25Source: Company data, Credit Suisse estimates, IBESFigure 2: Total ReturnSummaryStock GrowthDividend Yield12.0%11.6%10.9%Stock GrowthDividend Yield12.0%11.6%10.9%9.9%9.3%9.1%8.3%6.5%10.0%9.9%9.3%9.1%8.3%6.5%4.4%3.5%3.3%3.3%5.0%4.4%3.5%3.3%3.3%0.5%0.4%0.0%0.0%0.5%0.4%0.0%-4.0%-5.0%-4.0%SR (U)NWE (U

42、)SO (U)DTE (U)VST (N)WEC (N)BKH (N)ED (U)ES (O)DUK (O)CNP (O)EXC (O)NEE (O)CMS (O)NI (O)PNW (O)-10.0%SR (U)NWE (U)SO (U)DTE (U)VST (N)WEC (N)BKH (N)ED (U)ES (O)DUK (O)CNP (O)EXC (O)NEE (O)CMS (O)NI (O)PNW (O)Source: Company data, Credit Suisse estimatesAmericas/UnitedStatesElectricUtilitiesRatingPri

43、ce (22-Jan-19, US$)50.96Targetprice (US$)(from54.00)55.00 52-week pricerange(US$)53.48 -41.77Marketcap(US$m)Enterprise value(US$m)Target price is for 12 months.ResearchAnalysts Michael Weinstein, 212 3250897 HYPERLINK mailto:w.weinstein Khanh Nguyen,CFA212 5383524 HYPERLINK mailto:khanh.l.nguyen Mah

44、eepMandloi212 3252345 HYPERLINK mailto:maheep.mandloi CMS Energy Corp (CMS)Modest Program Equity Needs Eased a BitExpect an in-line 4Q18 at $0.40 and FY2018 at $234 vs consensus$2.34.A warm summer boosted 2018, with 2019 guidance introduced on the 3Q call in-line with our 6%-8% EPS growth expectatio

45、n. 2018 guidancewas narrowed to $2.31-2.34 (from ($2.30-2.34), expecting to be “toward the high end” following an adj 3Q beat $0.59 vs CS $0.57 and cons $0.58. With favorable weather YTD and cost/reinvestment flexibility, T9M EPS is tracking$0.27 ahead of last year, and management reaffirmed confide

46、nce for the upper end of the 2018 range. CMS also initiated 2019 guidance in-line with our previewed expectation at $2.46-2.50 vs CS $2.52 and consensus of$2.50, reiterating LT EPS growth rate of 6-8%. We expect the company to update guidance by another penny of two in January (4Q call) and remain a

47、bove the current range.Slight reduction to 2019 ATM equity needs as a result of strong cash position. CMSs ATM equity program is currently $60M-$70M on arun-ratebasis plus another $10M of annual DRiP, expected to be maintained in 2019. With tax reform requiring about $30-$40M of annual funding for t

48、he reduction of excess tax deferral balances, we had expected another $30M of ATM equity issuance in future years starting 2019 (i.e., a $110-$115M overall run rate). However, we think the extra $30M for tax reform might be reduced or avoided for 2019 (only) given the extra cash collected in 2018 wh

49、ile the company was awaiting a rate order. Its a modest positive driver for thisyear.Valuation.Our 2018 estimate increased to $2.34 from $2.33 while our 2019/20 estimates are unchanged. Our SoTP TP increases $1 to $55 basedon a higher average peer 2020 P/E multiple. Risks include regulatory outcomes

50、, capital plan execution, and interest rates.SharepriceperformanceFinancial and valuationmetricsYear12/17A12/18E12/19E12/20EEPS (CSadj.)(US$)2.172.342.522.68Prev.EPS(US$)-2.33-P/E(x)23.521.820.2P/Erel.(%)115.7132.6130.3135.9EBITDA(US$m)2,2032,1412,2982,397EV/EBITDA(current)11.511.811.010.5Net debt(U

51、S$m)11,29311,06311,93112,650FFO/Interest4.0On 22-Jan-2019 the S&P 500 INDEX closedat 2632.9FFO/TotalDebt40.13Daily Jan22, 2018 - Jan22, 2019, 01/22/18=US$44.16Number ofshares(m)283BV/Share (NextQtr.,US$)17QuarterlyEPSQ1Q2Q3Q4 Net debt (Next Qtr.,US$m)11,063Dividend (current,US$)1

52、.42017A0.710.330.620.51 Net debt/tot eq (NextQtr.,%)229.9Dividend yield (%)2.782018E0.860.480.590.40 Source: Company data, Thomson Reuters, Credit Suisse estimates2019E-CMS Energy Corp (CMS)Price (22 Jan 2019): US$50.96; Rating: OUTPERFORM; Target Price: (from 54.00) 55.00; Analyst: Michael Weinstei

53、nIncome Statement12/17A12/18E12/19E12/20ECompanyBackgroundRevenue (US$ m)7,069.87,076.37,425.57,580.8CMS Energy is a Michigan-based regulated utility, incorporatedasEBITDA (US$ m)2,2032,1412,2982,397CMS Energy in 1987, and has been serving customers inMichiganDepr. & amort.(881)(933)(959)(989)throug

54、h its Consumers subsidiary since 1886. CMS operatesacrossEBIT (US$)1,3071,2241,3431,411 three segments: Electric Utility, Gas Utility, andEnterpriseNet interest exp(419)(433)(435)(443)PBT (US$)888790908968Blue/Grey SkyScenarioIncome taxes(276)(128)(191)(203)Profit after tax612662717765Minorities(2)(

55、2)(2)(2)Reported net income (US$)609660715763Other NPAT adjustments(1)000Adjusted net income610660715763Cash Flow12/17A12/18E12/19E12/20EEBIT1,3071,2241,3431,411Net interest(419)(433)(435)(443)Change in working capital3289289289CAPEX(1,665)(2,007)(2,300)(2,200)Free cashflow to the firm40(87)(359)(17

56、9)Acquisitions0000Divestments0000Cash flow from investments(1,868)(2,270)(2,380)(2,280)Changes in Net Cash/Debt(1,494)230(868)(719)Balance Sheet (US$)12/17A12/18E12/19E12/20EAssetsCash & cash equivalents199365365365Total current assets2,4752,3742,0851,796Total assets23,05024,12125,25626,258Liabiliti

57、esTotal current liabilities2,2613,4423,4423,442Total liabilities18,57219,30820,11820,779Total liabilities and equity23,05024,12125,25626,258Our Blue SkyScenario(US$)(from 57.00)58.00Net debt11,29311,06311,93112,650In this scenario, we assume CMS is able to fully realize the valueofPer share12/17A12/

58、18E12/19E12/20Eits additional capex opportunities and receives favorableregulatoryNo. of shares (wtd avg)281283284284outcomes in Michigan. To arrive at our target price we apply a2.5xCS adj. EPS2.172.342.522.682020 P/E premium across the electric, gas and use a 16.5x P/EforPrev. EPS (US$)-2.33-the e

59、nterprises segment. We also assume a 40% chance of the$3-Dividend (US$)1.321.411.511.624B incremental capex and 30% chance of replacement of theMCVFree cash flow per share0.14(0.31)(1.27)(0.63) contract.Earnings12/17A12/18E12/19E12/20EOur Grey SkyScenario (US$)(from 46.00)47.00Sales growth (%)2.1In

60、this scenario, we assume CMS receives negativeregulatoryEBIT growth (%)4.0(6.4)9.75.1Net profit growth (%)6.6outcomes in Michigan. To arrive at our target price we apply a0.5xEPS growth (%)6.32020 P/E premium across the electric and gas segments toreflectEBITDA margin (%)31.230.331.031.6the challeng