公用事業(yè)行業(yè)反彈后的重新評(píng)估

1、Global Research14 February 2019UtilitiesReassessing our coverage universe after the utilities rallyMost preferred names: EDB, Equatorial and EnergisaThe Ibovespa Electrical Energy index (IEE) is up 35% in the past 6 months (vs. Ibovespa+25%), mostly driven by the improved macro outlook in the wake o

2、f last years elections and a more bullish outlook for privatization (top performers have been SoEs due to statements by government officials on potential privatization Eletrobras, Cemig, Copasa, Sabesp). We believe the strong performance of private transmission names has been mostly driven by the re

3、duction in long-term interest rates. We now estimate utilities are trading at an average implied IRR of c7.3% vs. 4.5% for Brazilian Treasury bonds a smaller premium than 6 months ago, but still attractive. Our most preferred names are EDB, Equatorial and Energisa.Upgrading EDB to BuyDespite the sto

4、cks strong recent performance, we believe its valuation remains attractive compared with peers. We expect a 2017-22 EBITDA CAGR of 11%, mostly driven by: 1) strong disco EBITDA growth (due to 2019 tariff resets and higher cost efficiency); and 2) the beginning of commercial operations of the transmi

5、ssion business.Downgrading Taesa to NeutralTaesa is up 27.5% in the past 6 months. We believe the positive impact of the reduction in Brazils long-term interest rates is mostly priced in and the companys growth outlook does not look promising. We expect fierce competition at upcoming greenfield auct

6、ions, with limited potential for value creation.Downgrading AES Tiete and Engie to SellRatingUBS Price Target Current % Upside /MarketImplied2019E EPSNEWOLDNEWOLDPriceDownsideCap (R$m)IRRNEWOLDChange (%)EquatorialBuyBuy108.084.084.428%16,7478.2%4.032.7447.3%EDBBuyNeutral23.015.018.127%10,9548.4%1.66

7、1.3126.6%EnergisaBuyBuy54.044.041.630%14,3968.7%1.891.890.0%LightBuyBuy22.520.018.919%3,8509.7%2.492.490.0%SabespNeutralNeutral43.041.038.312%26,1929.2%4.784.780.0%CemigNeutralNeutral14.011.013.54%19,6937.9%1.601.534.7%TaesaNeutralBuy26.025.025.71%8,8436.9%2.232.37-5.9%CteepNeutralNeutral76.572.078.

8、0-2%12,8487.1%7.817.810.0%CespNeutralNeutral24.023.022.38%7,3076.9%0.430.430.0%CopasaNeutralNeutral56.046.059.6-6%7,5499.3%6.005.4210.7%AES TieteSellNeutral10.010.511.2-11%4,3995.1%1.221.28-4.5%Engie EnergiaSellNeutral37.030.043.0-14%35,0974.0%2.752.538.5%CopelSellSell22.019.034.3-36%9,3893.0%5.225.

9、220.0%We reduce our long-term energy price from R$150/MWh to R$140/MWh due to a lower marginal cost of expansion at recent generation auctions. We downgrade AES Tiete to Sell given its unattractive valuation HYPERLINK l _bookmark1 (risk is skewed to the downside) and risk of dilution from a potentia

10、l capitalization if it acquires Alto Serto III from Renova (potential dilution not included in our PT). As the companys capital allocation track record is lackluster (solar M&A and greenfields at low IRR), we believe investors view the potential capitalization as negative. We downgrade Engie to Sell

11、 given its very expensive valuation. The stock price has risen 60.5% in the past 6m outperforming both the Ibovespa and the IEE index. In our view, its stronger-than-anticipated results and upside from acquisitions/greenfields announced in 2018 are more than priced in. We see downside potential for

12、Engie even if it wins TAG at a decent return.Source: UBS estimatesEquitiesAmericasUtilitiesMarcelo SaAnalyst HYPERLINK mailto:marcelo.sa marcelo.sa+55-11-3513 6518Fernando Zorzi Associate Analyst HYPERLINK mailto:fernando.zorzi fernando.zorzi+55-11-3513 6515 HYPERLINK /investmentresearch /investment

13、researchThis report has been prepared by UBS Brasil CCTVM S.A. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 60. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that

14、could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.The Ibovespa Electrical Energy index (IEE) is up 35% in the past 6 months (vs. Ibovespa +25%), mostly driven by the improved macro outlook in the wake of las

15、t years elections and a more bullish outlook for privatization. We believe the strong performance of private transmission names has been mostly driven by the reduction in long-term interest rates (the Brazilian Treasury bond yield has fallen to c4.5% in real terms from c6% in August 2018).The top pe

16、rformers have been state-owned companies due to statements by government officials on potential privatization (Eletrobras, Cemig, Copasa, Sabesp). Equatorial and Energisa have also performed well, as investors have started to price in the potential upside from turning around inefficient distribution

17、 concessions acquired from Eletrobras in 2018. We now estimate utilities are trading at an average implied IRR of c7.3% vs. 4.5% for Brazilian Treasury bonds.Figure 1: Brazilian utiliites 6m stocks performanceFigure 2: Brazilian utiliites YTD stocks performanceELET3 ELET6 CPLE6 CMIG4 EGIE3 ENGI11 SB

18、SP3 TRPL4 LIGT3 EQTL3 CSMG3 CESP6 ENBR3 TAEE11 TIET118.9%70.6%62.7%60.5%50.3%49.0%41.4%41.3%40.6%39.9%38.4%37.1%27.5%99.2%117.1%ELET3 ELET6 EGIE3 ENBR3 SBSP3 LIGT3 ENGI11 CPLE6 TRPL4 EQTL3 TIET11 TAEE11 CESP6 CSMG3 CMIG4-4.2%-4.2%21.1%14.4%12.7%12.6%11.8%11.6%11.1%7.2%4.8%33.9%32.4%29.1%47.5%Source:

19、 Bloomberg, UBS estimatesSource: Bloomberg, UBS estimatesYTD9.4%11.3%1 year18.9%37.6%6 months25.2%34.9%3 months11.9%18.2%1 month2.7%5.2%Figure 3: Ibovespa vs. IEE index performanceIbovespaIEE indexSource: Bloomberg, UBS estimatesRating changesEnergias do Brasil (ENBR3) upgrading to Buy on attractive

20、 valuation and strong EBITDA growth: Despite the stocks strong recent performance, we believe its valuation remains attractive compared with peers. We expect a 2017-22 EBITDA CAGR of 11%, mostly driven by strong disco EBITDA growth (due to 2019 tariff resets and higher cost efficiency) and the begin

21、ning of commercial operations of the transmission business.Engie (EGIE3) downgrading to Sell from Neutral on expensive valuation: The stock price has risen 60.5% in the past 6 months, including 27% in January alone, outperforming both the Ibovespa and the utilities sector index. In our view, its str

22、onger-than-anticipated results and upside from acquisitions/greenfields announced in 2018 are more than priced in. We see downside potential for Engie even assuming it wins TAG at a decent return (10% ROE). We estimate Engie is trading at an implied IRR of 4.0% vs. 4.5% for Brazilian Treasury bonds.

23、AES Tiete (TIET11) - downgrading to Sell from Neutral on capital allocation concerns and lower long-term energy price: We reduce our long-term energy price from R$150/MWh to R$140/MWh due to a lower marginal cost of expansion at recent generation auctions. Moreover, leverage has increased on the bac

24、k of acquisitions, and we believe Tiete may need a capitalization if it acquires Alto Sertao III from Renova. Given that the companys capital allocation track record is lackluster (solar M&A and greenfields at low implied returns), we believe investors view the potential capitalization as negative.T

25、aesa (TAEE11) downgrading to Neutral from Buy on limited upside potential and recent stock performance: Taesa is up 27.5% in the past 6 months. We believe the positive impact of the reduction in Brazils long-term interest rates is mostly priced in and the companys growth outlook does not look promis

26、ing. We expect fierce competition in upcoming greenfield auctions, with limited potential for value creation.Summary of rating, estimate and PT changesWe are updating our PTs for all covered companies given the change in our cost of equity assumptions. In addition, we are updating our estimates for

27、AES Tiete, Cemig, Copasa, EDB, Engie, Equatorial and Taesa.Figure 4: Summary of rating and PT changesR atingOldN ewPT ( R $/ sh)Com panyOld PTKereductionOtherchangesN ew PTChange ( N ewvs O ld)AES T ie teNeutralSell10.50.5(1.0)10.0(0.5)Cem igNeutralN eutral11.03.0CespNeutralN eutral23.01.0

28、0.024.01.0CopasaNeutralN eutral46.03.66.456.010.0CopelSellSell19.03.00.022.03.0CteepNeutralN eutral72.04.50.076.54.5EDBNeutralB uy15.03.24.823.08.0EnergisaBuyB uy44.010.00.054.010.0EngieNeutralSell30.03.04.037.07.0EquatorialBuyB uy84.015.18.9108.024.0LightBuyB uy20.02.50.022.52.5SabespNeutralN eutra

29、l41.02.00.043.02.0TaesaBuyN eutral25.02.0(1.0)26.01.0Source: UBS estimatesFigure 5: Upside/downside skew of AES Tiete, Cemig, Copasa, Copel, EDB, Energisa, Engie Energia, Equatorial, Light and Taesa% difference from current price to downside base case upside scenarios-60% -40% -20%0%20%40%60%upside

30、downside skewEnergisa-16%30%44%Equatorial-12%28%43%EDB-17%28%44%Light-31%19%Cemig-26%4%Taesa-14%1%17%Copasa-28%-6%31%AES Tiete-42%-11%16%Engie Energia-26%-14%6%Copel-48%-36%11%2.8 to 1 4 to 12.7 to 1Buy Buy Buy53%56%1.7 to2.1 to1.2 to1.1 to1 to1 to1 to11Buy Neutral Neutral NeutralSell Sel

31、l SellSource: UBS estimatesAES Tiete (Sell; R$10 PT)We are adjusting our 2018/19/20/21/22E EBITDA +4%/-1%/+2%/-3%/-5%, as we now incorporate in our model the 3Q18 results and reduce our long-term energy price assumption to R$140/MWh from R$150/MWh. AES Tiete has uncontracted capacity of 20%/20%/21%/

32、49%/60% for 2018/19/20/21/22. In addition, we increase our 2018E EBITDA due to a lower expected 4Q18 GSF of 19.3% (vs. 25% previously). The changes in our net income estimates are mainly due to our EBITDA changes.Our 2019/20 EBITDA estimates are 5%/4% above consensus. We believe consensus estimates

33、have not yet incorporated AES Tietes recent solar and wind M&A and greenfield projects.EBITDA1,0191,3681,4281,3601,3591,364UBSeUBSe vs. MeanConsensus1,019-2%1,3685%1,4284%Net Income2018e2019e2020eFigure 6: Estimates (old vs. new)Figure 7: UBS vs. Consensus NEW2018e 2019e 2020e 2021e 2022e 2023eEBITD

34、A2018e 2019e 2020eNet Revenues1,9722,3102,0822,0402,0662,105Number of contributions141413Net Income260480591567578597EBITDA High1,1241,4521,493 OLD2018e 2019e 2020e 2021e 2022e 2023eEBITDA Mean1,0381,2991,379Net Revenues2,2662,1592,1002,1252,1842,287EBITDA Low9181,0771,088EBITDA9821,3761,4061,4031,4

35、331,501Net Income246503545564599664CHANGE2018e2019e2020e2021e2022e2023eNet Revenues-13.0%7.0%-0.9%-4.0%-5.4%-7.9%EBITDA3.7%-0.5%1.6%-3.1%-5.2%-9.2%Number of contributions141413Net Income6.0%-4.5%8.3%0.6%-3.6% -10.0%Net Income High486548557Net Income Mean306440482Net Income Low194299296UBSe260480591U

36、BSe vs. Mean Consensus-15%9%22%Source: UBS estimatesSource: UBS estimates, BloombergWe are lowering our PT to R$10 from R$10.5 mainly due to our lower long-term energy price assumption of R$140/MWh, partially offset by our lower cost of equity assumption of 6.8% (vs. 7.6% previously).Figure 8: Break

37、down of PT changeFigure 9: Sum-of-the-parts (R$/sh) 0.19.710.51.2 1.0 0.5Old 12m fair valueLower KeLower long-term energt priceFine-tunning New 12m fairvalueHydro assetsAlto Sertao II Bauru+Boa Hora+AGV solar power plants12m fair valueSource: UBS estimatesSource: UBS estimatesFigure 10: FC

38、FE (R$ m)CASH FLOW (DCF)4Q18e2019e2020e2021e2022e2023ePerpetuityNPVEquityvalue (4Q18-2023) - R$m2,540EBITDA (R$m)2811,3681,4281,3601,3591,364NPV Equity value perpetuity - R$m1,606Working Capital Change(9)(31)39(43)(20)(16)Total Equity value - R$m4,146Taxes(31)(193)(225)(206)(206)(207) Number of shar

39、es - Million393Capex(199)(234)(60)(76)(82)(85) Fair Value (R$/share)10.5 Debt Variation000000Dividends (DPS) - R$/share(1.1)Interest Expense(97)(365)(302)(302)(302)(302) GSF judicial dispute(1.4)FCFE (R$m)(55)546880733750754 12-month fair value (R$/share)9.7 FCFE in real terms (R$m)(54)5178016426316

40、10Current share price (R$)11.1FCFE (Discounted by Ke)(54)4766915184774321,606Upside (%)-12.2%Source: UBS estimates12-month dividend (%)9.9% Total return (%)-2.3%Cemig (Neutral; R$14 PT)We are increasing our 2018/19/20/21E EBITDA 9.9%/10%/11.9%/11.5% due to the strong 3Q18 results and likely increase

41、 in cost efficiency in the wake of the elections. On 28 October, Romeu Zema (NOVO) was elected governor of Minas Gerais with 71.8% of the vote. Mr. Zema has publically said he plans to improve the efficiency of both Cemig and Copasa and then privatize them HYPERLINK .br/copasa/noticia/7685495/sensac

42、ao-do-novo-romeu-zema-quer-privatizar-cemig-e-copasa-mas-nao-imediatamente (click here for HYPERLINK .br/copasa/noticia/7685495/sensacao-do-novo-romeu-zema-quer-privatizar-cemig-e-copasa-mas-nao-imediatamente Infomoney news on Romeu Zema statements). Our 2018E EBITDA increase is also due to a lower

43、estimated GSF in 4Q18. We are increasing our 2018/19/20/21E net income 19.6%/4.7%/13.4%/10.8%, mainly due to our EBITDA increase.Our EBITDA estimates are 11%/9%/4% above consensus. We believe consensus estimates do not incorporate the strong 3Q18 disco and genco results and lower GSF expected for 4Q

44、18. Moreover, we believe we assume a higher cost efficiency than consensus.UBSeUBSe vs. MeanConsensus4,04411%4,7479%4,9614%Net Income2018e2019e2020eFigure 11: Estimates (old vs. new)Figure 12: UBS vs. Consensus NEW2018e2019e2020e2021e EBITDA2018e2019e2020eNet Revenues23,04523,85123,32023,793Number o

45、f contributions131312EBITDA4,0444,7474,9614,925EBITDA High4,0354,9565,959Equity income124605663600EBITDA Mean3,6404,3514,755Net Income1,2892,3292,5952,581EBITDA Low3,1993,7903,990 OLD2018e2019e2020e2021e Net Revenues22,56022,34023,20023,666EBITDA3,6814,3144,4344,419Equity income123595604643Number of

46、 contributions131312Net Income1,0782,2252,2872,329Net Income High1,6322,6852,893 CHANGE2018e2019e2020e2021eNet Income Mean1,0961,9582,289Net Revenues2.1%6.8%0.5%0.5%Net Income Low4271,4781,647EBITDA9.9%10.0%11.9%11.5%UBSe1,2892,3292,595Equity income0.9%1.6%9.7%-6.7%UBSe vs. Mean Consensus18%19%13%Ne

47、t Income19.6%4.7%13.4%10.8%Source: UBS estimatesSource: UBS estimates, BloombergWe are increasing our PT to R$14 from R$11 due to: 1) a lower cost of equity of 8.2% (vs. 10.3% previously); 2) higher estimates; 3) higher fair value for Taesa (we are increasing our PT for Taesa to R$26 from R$25); and

48、 4) higher fair value for Light (we are increasing our PT for Light to R$22.5 from R$20).0.5 1.0 0.9 0.211.013.6Figure 13: Breakdown of 12-month fair value change (R$/sh)Old 12m fairLower KeTaesa higher fair Light higher fairHigherNew 12m fairvaluevaluevalueestimatesvalueSource: UBS estimatesFigure

49、14: Sum-of-the-parts (R$/sh)0.50.82.06.6DiscoGTOther consolidated assetsHoldingNon-consolidated assets (Taesa/Light/ Renova/Others)IoC tax benefitLight Put OptionGenco compensation12m Dividends12m Fair Value 0.9 3.62.1Source: UBS estimatesFigure 15: FCFE (R$ m)CASH FLOW (DCF)4Q18e2019e2020

50、e2021e2022e2023ePerpetuityNPVEquityvalue (4Q18-2023) - R$m7,678EBITDA (R$m)1,2844,7474,9614,9254,7324,637NPV Equity value perpetuity - R$m10,700Working Capital Change(20)7832352318Total Equity value - R$m18,378Taxes(258)(746)(851)(865)(749)(824) Number of shares - Million1,459 Capex(921)(1,561)(1,36

51、2)(1,378)(1,434)(1,491) Fair Value (R$/share)12.6Equity Income200605663600711742 Dividends (DPS) - R$/share0.6Debt Variation(287)(509)175106108110 12-month fair value (R$/share)13.6 Interest Expense(312)(1,243)(1,140)(1,039)(1,191)(848) FCFE (R$m)(315)2,0772,6812,3522,1812,345Current share price (R$

52、)13.3FCFE in real terms(311)1,9652,4392,0581,8351,897Upside (%)2.2% 12-month dividend (%)4.7% NPV(305)1,7812,0431,5931,3121,25410,700Total return (%)6.9%Source: UBS estimatesCopasa (Neutral; R$56 PT)We are decreasing our 2018E EBITDA 6.3%, as we incorporate the weaker-than- expected 3Q18 results in

53、our model. We are increasing our 2020/21E EBITDA 6.2%/8.7%, as we now assume higher cost efficiency from 2020 onwards (cR$100m in cost-cutting) given the improved outlook for the company after the elections. On 28 October, Romeu Zema (NOVO) was elected governor of Minas Gerais with 71.8% of the vote

54、. Mr. Zema has publically said he plans to improve the efficiency of both Copasa and Cemig and then privatize them HYPERLINK .br/copasa/noticia/7685495/sensacao-do-novo-romeu-zema-quer-privatizar-cemig-e-copasa-mas-nao-imediatamente (click here for HYPERLINK .br/copasa/noticia/7685495/sensacao-do-no

55、vo-romeu-zema-quer-privatizar-cemig-e-copasa-mas-nao-imediatamente Infomoney news on Romeu Zema statements).We are adjusting our 2018/19/20/21E net income -22%/+11%/+15%/+18%, mainly due to our EBITDA changes. The increase in our 2019E net income is also due to a stronger BRL assumption (c10% of Cop

56、asas debt is in foreign currency).Figure 16: Estimates (old vs. new)Figure 17: UBS vs. Consensus NEW2018e 2019e 2020e 2021e EBITDA2018e2019e2020eNet Revenues4,2634,5524,8014,943EBITDA1,5581,7712,0562,103Net Income609761871891 OLD2018e 2019e 2020e 2021e Net Revenues4,1294,3234,5454,648EBITDA1,6621,77

57、51,9351,935Net Income782687760753 CHANGE2018e 2019e 2020e 2021e Net Revenues3.2%5.3%5.6%6.4%EBITDA-6.3%-0.2%6.2%8.7%Net Income-22.1% 10.7% 14.6% 18.3%Source: UBS estimatesNumber of contributions999EBITDA High1,7011,8842,155EBITDA Mean1,5681,7341,919EBITDA Low1,4531,5341,736UBSeUBSe vs. MeanConsensus

58、1,558-1%1,7712%2,0567%Net Income2018e2019e2020eNumber of contributions999Net Income High782806965Net Income Mean608673780Net Income Low550486654UBSe609761871UBSe vs. Mean Consensus0%13%12%Source: UBS estimates, BloombergWe are increasing our PT to R$56 from R$46 mainly due to a lower cost of equity

59、of 8.6% (vs. 9.4% previously) and higher estimates from 2020 onwards (cR$100m in cost-cutting). 6.3 3.645.955.8Figure 18: Breakdown of 12-month fair value change (R$/sh)Old 12m fair valueLower KeHigher estimatesNew 12m fair valueSource: UBS estimatesFigure 19: FCFE (R$ m)CASH FLOW (DCF)4Q18E2019E202

60、0E2021E2022E2023EPerpetuityNPV Equity value (4Q18-2023) - R$m2,878EBITDA (R$m)4551,7612,0452,0922,1082,212NPV Equity value perpetuity - R$m4,027Working Capital Change(147)(26)(11)(33)(33)(18)Total Equity value - R$m6,905Taxes(46)(129)(221)(235)(226)(226)Number of shares - Million127Capex(249)(819)(9