OGK-5 Guidance Provided by Enel
OREANDA-NEWS. July 09, 2010. Enel, the controlling shareholder of OGK-5, held an investor day in Moscow, reported the press-centre of OTKRITIE Financial Corporation. Below are key takeaways:
Enel expects OGK-5’s EBITDA to rise to EUR471m in 2011, and to EUR1.1bn by 2014.
2014 EBITDA margin will be 40%.
2010-2014 capex will amount to EUR1bn, 25% of which the company will spend on the commissioning of new capacity. OGK-5’s installed capacity will increase from 8.2GW to 8.8GW by 2014.
In 2011 the capacity tariff for OGK-5’s new generation blocks will be in the range of EUR12.3 – 13.9/kW/month.
View: We have the same capex expecations for OGK-5 in our model, while our EBITDA forecast of EUR454m is 4% below the company’s guidance. From our standpoint, Enel provided a very bullish long-term guidance. The company anticipates an average 2014 electricity spot price in Russia of EUR43/MWh versus our forecast of EUR32/MWh. Moreover, our new capacity tariff expectation for 2011 is EUR12.4/kW/month – on the lower end of the company’s guided range. As a result, OGK-5 2014E EBITDA guidance is almost twice our estimate of EUR562m, while we expect only a 26% margin. We see Enel’s bullish guidance of OGK-5’s financials as positive for investor sentiment on the stock.
Valuation: OGK-5 trades at an EV/Installed capacity of USD332/kW, which is at a premium to the OGK average of \\$246/kW.
Action: We view this news positive for the stock, though see limited upside potential from the current market levels and hence reiterate our HOLD rating.