Enel Russia - Is There Life After Reftinskaya Sale?
The Reftinskaya coal-fired power plant is a behemoth. The 3.8 GW plant is Russia's second largest thermal power plant and its largest coal-fired one. It is also an important asset for Enel Russia, accounting for 40% of its installed capacity and 47% of its electricity output. However, parent company Enel is looking to sell the plant and seems to have found a buyer. The question now is what happens to Enel Russia after the sale? There is a view that the loss of such a major asset would be quite detrimental. We, however, do not subscribe to this view. Having updated our valuation of Enel Russia and taken a closer look at Reftinskaya, we conclude that the disposal of the plant is not a negative scenario for Enel Russia's minority shareholders. Although our updated figures lead us to trim our target price from R1.66 per share to R1.38, given the recent selloff in the shares, we upgrade the stock to BUY.PJSC Enel Russia is a wholesale generation company in Russia. Co.'s main areas of operation are production of power and heat, supply (sale) of power and heat, receipt (purchase) of power and heat from the wholesale power (capacity) market. Co. is active in four production branches around Russia: in the Ural region - Reftinskaya GRES, Sredneuralskaya GRES, in the northern Caucasus - Nevinnomysskaya GRES, and in Central Russia - Konakovskaya GRES. Co.'s aggregate installed capacity is 9,677 MW for power and 2,382 GCal/h for heat. Co. provides power and heat to both industrial enterprises and household consumers via local power distribution networks.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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