We recently upgraded our recommendation on Brazilian electric
Companhia Energetica de Minas Gerais
), also known as CEMIG from Neutral to an Outperform rating.
CEMIG SA -ADR (CIG): Free Stock Analysis
COPEL-ADR PR B (ELP): Free Stock Analysis
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Ranking fifth among the electricity generators in Brazil, Cemig
derives approximately 97% of electricity from hydroelectric
sources. The company is in a constant pursuit to attain the
position to benefit from the expected growth in electricity
demand in Brazil which is gearing up to host two major sporting
events in the coming years.
The Brazilian government, in a bid to improvise the electricity
industry through its Second Accelerated Growth Program (PAC 2),
has allocated approximately R$1.1 trillion. In Cemig's area of
operation-according to the national Energy Research Institute,
EPE-average consumption growth is expected to be 4.5% from 2011
Cemig's management, over the long term (2011-2015), expects total
energy distribution to reach a range of 48.8-53.8 TWh by 2015.
Energy generation in 2015 is estimated to be roughly 36.1 TWh
while EBITDA for 2015 would be within the R$5.3-6.1 billion range
Prospects look bright for the company as is depicted in its
impressive third quarter 2012 results. Net income registered a
43% year-over-year increase and EPADR came in at US$0.64. Net
revenue grew 19% to US$2.4 billion on the back of a 1.7% increase
in electricity sold to 17,715 GWh.
The current Zacks Consensus Estimates for 2012 and 2013 are
US$2.57 and US$1.46 per ADR, reflecting annual increase of 35.3%
and decline of 43.2%, respectively.
The stock currently bears a Zacks #1 Rank, translating into a
short-term Strong Buy rating. On the other hand, the company's
Companhia Paranaense de Energia
) currently has a Zacks #3 (Hold) Rank while its 2012 and 2013
Zacks Consensus Estimates stand at US$1.70 and US$2.02,
predicting annual decline of 27.4% and growth of 18.8%,