4Q17 Preview: Weak liberalized should be no news
Well flagged weakness in Iberian liberalized areas, under pressure from the impact of thedrought in Iberia on margins should remain a key driver for the results of Iberian integrated utilities in 4Q17. Considering the numbers already reported by Gas Natural (GAS SM, Eur18.31, Neutral, FV Eur20.0), with EBITDA from Electricity Generation in Spain down 74% yoy, the average yoy fall in 4Q17 EBITDA from Iberian liberalized should be close to 50%. On top of this, for companies with large US and Latam exposures, like Iberdrola and EDP/EDPR, the unfavourable evolution of the USD and BRL vs EUR should also have been a drag. Having said this, we do not expect results to have a meaningful impact on stock prices, as most of the drivers behind the weakness can be monitored by investors almost in real time. Instead, we see market participants focused on outlooks and earnings guidance, namely at Iberdrola, which is expected to provide a view for the next four years. For Endesa and EDP/EDPR we do not expect major news on this front, as the former updated its guidance in Nov-17 and EDP/EDPR might do that before the end of 1H18.EDP Renovaveis is a renewable energy company based in Spain. Co. is engaged in activities related to the electricity sector, namely the planning, construction, operation and maintenance of electricity generating power stations, especially hydroelectric, mini-hydroelectric, wind, solar, thermal solar, photovoltaic, biomass and waste plants, among others. Co. designs, develops, manages and operates power plants. Co. generates electricity using renewable energy sources mostly wind energy. Co. owns EDP Renewables Europe that operates in several European countries and Horizon Wind Energy, which operates in the United States. Co. is a part of the Energias de Portugal group.
EDP Energias de Portugal is a utility company engaged as a generator, distributor and supplier of electricity in Portugal, and as an electricity generation company and a gas distributor in the Iberian Peninsula. In addition, Co. is a wind power operator with windfarms for energy generation in the Iberian Peninsula, the U.S., Canada, Brazil, France, Belgium, Italy, Poland and Romania and is engaged in developing wind projects in the U.K. Co. is also engaged in generating solar photovoltaic energy in Portugal, Romania and the U.S, and in Brazil it is engaged as an operator in electricity generation. As of Dec 31 2015, Co. had 9.7 million electricity customers and 1.4 million gas customers.
Endesa is engaged in the production, transmission, distribution, and supply of electricity, through hydroelectric, fossil fuel, and nuclear generation. Co. is also engaged in the mining of coal for use in its fossil-fuel electric plants; mining research; land restoration, and environmental monitoring and control.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
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