EUR 850.00 For Business Accounts Only

Morningstar | Foreign Exchange Volatility Reduces Enel's Fair Value Estimate; Reports 2Q Results

We are lowering our fair value estimate for Enel Generacion Chile  to $24 per share from $26 after incorporating foreign exchange volatility since our last update. We are reaffirming our narrow economic moat and stable moat trend ratings after the company recently reported EBITDA for the first six months of $501 million, down from $556 million from the same year-ago period.

The 11% increase in EBITDA was mostly attributable to the addition of 1.2 GW of renewable generation, named GHP Chile, and represents a 19% increase in Enel's installed capacity. The additional generation positions the company well for its climate initiative, recently signing the voluntary guidelines as part of the Task Force on Climate-related Financial Disclosure. Enel Chile also plans to add nearly 1.2 GW of solar, wind, and geothermal generation by 2024.

Hydrology conditions continue to improve, with hydro generation increasing 1.0 terawatt hours to 4.6 terawatt hours. The improved generation is attributed to the continued recovery in water levels from recent drought conditions, which reduced hydro output. Higher hydro output reduces the need for costlier energy purchases on the spot market. Enel's core business performed well, with customer accounts increasing 3% to 1.9 million driven by modest GDP growth.