We recently upgraded our recommendation on Brazilian electric
Companhia Energetica de Minas Gerais
), also known as CEMIG from Neutral to an Outperform rating.
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 to 2021.
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 by 2015.
Prospects look bright for the company as is depicted from 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%,
CEMIG SA -ADR (CIG): Free Stock Analysis
COPEL-ADR PR B (ELP): Free Stock Analysis
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