EDP ​​​​​​Renovaveis, Portuguese energy | Investment strategies

2021 RESULTS

EDP ​​​​​​Renovaveis closed last year 2021 with a net profit of 655 million euros, 18% more than the previous year. Total revenue amounted to €1,758 million, 2% more than in 2020. It should be noted that the impact of additional MW capacity (+€198 million over a year), as well as the increase in the average selling price (+€33 million over one year), were not offset by the slightly lower renewable resource (-€12 million over one year), asset rotation transactions and adverse currency translation.
EBITDA was €1,760 million (+6% year-on-year) and EBIT was €1,151 million (+9% year-on-year) ), primarily driven by higher capital gains and partially offset by revenue performance in North America, due to the first quarter weather event in the US, reduction in renewable resources averages in the United States and unfavorable currency translation.

EDP ​​​​​​Renovaveis, Portuguese energy is also heating

SOLVENCY

EDPR’s net debt amounts to €2,935 million at the end of 2021, €508 million less than the previous year, both due to the aforementioned income from asset rotation and the capital increase carried out by the company. Under this debt figure, the solvency multiple, NFD/EBITDA closes 2021 at 1.67v, an improvement compared to 2020. Under the estimate of the results for 2021, the ratio rises to 2.58v, in any case at moderate levels.

EDP ​​​​​​Renovaveis, Portuguese energy is also heating

OPERATIONAL RESULTS

At the end of 2021, the company manages a portfolio of 13.6 GW, including 12.5 GW consolidated and 1.1 GW consolidated using the equity method (Spain, Portugal, USA and Offshore). Over the year as a whole, the company increased its capacity by 2,584 MW of wind and solar capacity, including 2,273 MW fully consolidated, in particular 682 MW in Europe, 1,204 MW in North America, 359 MW in Brazil and 28 MW in Asia. Peaceful. The consolidated capital increased by 311 MW thanks to the commissioned offshore projects.
In line with your asset rotation strategy, EDPR sold its 80% stake in a 405 MW operating wind portfolio, an 80% stake in a 200 MWac solar project and another 100% stake in a Build and Transfer wind project in the United States. 302MW. In Europe, the company successfully completed the sale of a 100% stake in a 221 MW wind portfolio in Portugal. In total, the net change in EDPR’s consolidated portfolio was +1,411 MW over the year as a whole.
As of December 2021, EDPR had 1.8 GW of capacity under construction, including 1,592 MW of onshore wind and 232 MW of solar.
During the year, EDPR produced 30.3 TWh of clean electricity (6% more year-on-year), avoiding 18 million CO2 emissions. The year-over-year evolution benefits from the capacity additions of the last 12 months as well as a fairly stable renewable resource.

STRATEGIC PLAN 2021-25

EDPR carried out a capital increase of 1,500.25 million euros as part of its 2021-25 Strategic Plan, to partially finance the CAPEX of €19 billion for the installation of 20 GW of renewable energy capacity by 2025. The objective set by the company in this new plan is to reach 20 GW additional in 2021/25, it is an installation rate of 4 GW/year. 41% will be solar, 54% wind off the coast3% wind off the coast and 2% other energies. Precisely in 2021, the company added 2.6 GW of capacity, a record figure, reaching a portfolio of 13.6 GW.

Regarding the objectives in terms of results, EDPR wishes to reach an EBITDA of 2 billion euros in 2023 and increase it to 2.3 billion euros in 2025 (+7% CAGR20-25); the net result will be, according to its objectives, greater than €600 million in 2023 and €800 million in 2025 (+8% CAGR 20-25).

EDP ​​​​​​Renovaveis, Portuguese energy is also heating

PURCHASE RISK

EDPR has reached an agreement with certain funds managed by Macquarie Infrastructure and Real Assets, for the acquisition of control of the energy activities of Viesgo. Specifically, EDPR will acquire 100% of the portfolio of 511 MW (EBITDA + Equity Income MW) of installed renewable capacity in Spain (84%) and Portugal (16%). This is a quality portfolio with a strong wind resource (average utilization factor of 29%) and a low risk profile, of which 87% of the capacity is regulated with an average age of 13 years (around 7 remaining years). ). The wallet also has interesting potential for future expansions/upgrades given the profile mentioned above.

The amount to be paid by EDPR for the renewable activity of Viesgo corresponds to an enterprise value (EV) of 565 million euros, which represents a ratio between EV and net MW of 1.1 million euros.

This transaction strengthens EDPR’s position as one of the main leaders in the renewable energy market, particularly in Spainwith a highly synergistic portfolio of high quality assets, with strong wind resources and a low risk profile, also offering attractive growth opportunities in the future.

SHAREHOLDER COMPENSATION

In its new Strategic Plan, EDPR sets a dividend floor of €0.08/share. At its last general meeting of 2021, the Group approved the proposal of the board of directors relating to the payment of a gross dividend of 0.08 euro per share, which amounts to distributing 69.78 million euros of dividend ordinary and 7.06 million euros additional dividend. The payment was made in May 2021.

FUNDAMENTAL ASSESSMENT

The past year 2021 has been characterized by volatility and difficulties in the electricity sector. Despite this context, EDPR has achieved good results and growth figures. The company is making steady progress towards achieving the objectives set out in the strategic plan. The year 2022 has started with increased turmoil and volatility in the sector, mainly due to the conflict in Eastern Europe with Russia’s invasion of Ukraine. The intervention of the European authorities is necessary to correct the imbalances of the wholesale electricity and gas market. Consequently, regulatory instability remains and adds risk to the strategic plans of companies in the sector. Europe’s acceptance of considering the Iberian Peninsula as an energy island is positive.

In analysis by ratios on estimated and under-expected results for the end of 2022 (EPS: €0.6/share), the stock market price is already highly adjusted to the company’s valuation. It trades at a PER above 35.4v, compared to a historical average for a value of around 31v and adjusted against its competitors. Also by multiple on sales and book value, the valuation is already very adjusted. It pays a dividend, but very little. Expensive action.

EDP ​​​​​​Renovaveis, Portuguese energy is also heating

Based on our fundamental assessment, we are neutral with medium/long term value.

COMPANY DESCRIPTION

EDP ​​Renewables is the world’s fourth largest producer of renewable energy. The group’s activity is organized around 3 areas:

  • development and building power generation units.
  • Electricity production: wind power and hydroelectricity.
  • exploration and maintenance of power plants.

With a strong development pipeline, world-class assets and state-of-the-art operational capabilities, EDPR has experienced exceptional development in recent years and is currently present in 14 markets (Belgium, Brazil, Canada, France, Greece, Italy, Mexico, Poland, Portugal, Romania, Spain, United Kingdom, United States and Colombia).

EDPR’s main shareholder is IT group, with 74.98% of the share capital. Energies of Portugal, (EDP), is a global energy company and leader in value creation, innovation and sustainability. EDP ​​has been listed on the Dow Jones Sustainability Index for 13 consecutive years.

EDP ​​​​​​Renovaveis, Portuguese energy is also heating

Excluding the participation of the EDP Group, EDPR shareholders include more than 30,000 institutional and private investors spread over 26 countries, with a particular focus on the United States. Institutional investors represented 94% of the company’s shareholders, mainly investment funds and socially responsible (“SRI”) investors, while private investors, mostly Portuguese, represented 4%.

EDP ​​​​​​Renovaveis, Portuguese energy is also heating

WARNING

The data, opinions, estimates, forecasts and recommendations contained in this report have been prepared by Investment Strategies and its collaborators with the aim of providing its users with information on companies, sectors and financial markets, without directly or indirectly implying any any personalized recommendation of the company or of the assets analyzed in order to constitute personalized investment advice. The analysis is based on the preparation of detailed financial projections based on public information and following the methodology of traditional fundamental analysis. These parameters represent the analyst’s personal opinion or estimate. The person receiving this analysis must exercise judgment when using these parameters and must consider them as one more element in their investment decision-making process. These parameters do not constitute a personalized investment recommendation.

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