Companhia Paranaense De Energia (ELP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
COPEL's net earnings in 2013 increased 51.6% year over year, while earnings per American Depository Receipt (ADR) came in at $1.87. Revenues were up 8.1%, partially offset by a 7.6% increase in operating costs and expenses. Loans, financing and debentures were up 32.1% sequentially. Rising expenses and loans together with dependency on rainwater for electricity generation and political interference can prove to be major impediments to growth. Also, the non-renewal of lease agreement for the Arauc ria thermal power plant will result in lower lease revenues in the quarters ahead. Considering these headwinds, we maintain an Underperform recommendation on the stock. However, over the long term, we believe COPEL will reap benefits from industrial developments in Brazil.

Overview:

Companhia Paranaense de Energia (ELP), also known as COPEL, is a fully integrated electric utility in Brazil. The company is engaged in the generation, transmission and distribution of electricity to the State of Paran . The provincial government of the State of Paran controls about 58.6% of the shares of COPEL. The company directly serves approximately 4.2 million customers in 395 municipalities and 1,113 localities.

COPEL has roughly 5,640 megawatt (MW) of generating capacity, 99% of which is hydroelectric. The company owns 21 power plants, including 19 hydroelectric, 1 thermal and 1 wind plant. It has interests in as many as 9 power generation companies. COPEL also provides telecommunications, natural gas, engineering, water and sanitation services.

In Oct 2013, COPEL restructured its business and came up with two new subsidiaries, in addition to the existing three Copel Gera o e Transmiss o (GeT deals with the generation and transmission of electricity), Copel Distribui o (DIS deals with the distribution of electricity) and Copel Telecom (TEL deals with the telecommunication business).

The two new subsidiaries are Copel Participa es and Copel Renov veis]. The former will primarily focus on management of the company's interests in special purpose entities (SPEs) in the energy, gas, telecommunication, sanitation and service sectors while the latter will centralize the company's investments in renewable energy generation projects.


Companhia Paranaense De Energia (ELP): Read the Full Research Report

COPEL-ADR PR B (ELP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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