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A report of Goldman Sachs on the electric drives out to the shareholders

The representatives of the investment bank are based on a meeting held with the Ministry of Energy

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A report of Goldman Sachs on the electric drives out to the shareholders

representatives of investment bank are based on a meeting held with Ministry of Energy

report reveals that The representatives of Goldman Sachs met last week with secretary of State for Energy, Daniel Navia, and his team, within tour that you have done for Spain. The meeting, however, was also attended by or investment banks and analysts in one of periodic meetings that are held to have status and prospects of energy sector.

“After roadshow to Spain and our conversations with government officials, we lowered ratings and ratings on all Iberia”, says document, which attributes this opinion to risks involved, regulatory framework planned for period 2020-2025. To your understanding, can lead to a fall in profitability of up to 40%. We also found additional risks of a predictable regulatory review of renewable energy (valid until 2020), “where application of law would imply a reduction of 35% in returns”.

A drop of 2.231 billion euros in a single day

Actuated. The shares of company declined yesterday to 2.33%, to 70,4 euros per title. Its market capitalization at close was of 4.026,5 million. Lost 96 million in a day.

Endesa. Fell in Bag yesterday a 2,29%, up to 20 euros. Its capitalization at close was in 21.190,9 million. Lost 498 million in session.

Natural Gas. The company fell 3.15%, up to 19,35 euros per title. The capitalization was 19.368,3 million. Missed it yesterday 630 million euros.

Iberdrola. Their titles fell 1.75% to 6,75 euros per share. Worth in Bag 41.340 million at closing, 758 million less than previous day.

mains. His fall was 2,46%, to 18,25 euros. Closed with a value of 9.845 million. Lost 249 million.

According to representatives of Goldman Sachs, for se forecasts are based on that officials of Ministry of Energy, “reiterated” that regulatory framework existing at present shall continue to apply to period 2020-2025.

At aforementioned meeting, Navia repeated what minister, Álvaro Nadal, explained at Congress of Deputies last June. That is to say, that remuneration to renewable energies, which is fixed on basis of bonus of Spanish debt over a differential of 300 points every six years, has to be revised in 2019 to enter into force in 2020 and which is expected to go down. This means that profitability is also lower, not be changes that alter trend.“Considering decline of 250 basis points in sovereign yields since last review, networks of transmission and distribution (T&D) of energy would suffer a cut in profitability of up to 40%”, stated in report. In his judgment, could imply a decrease of two digits in EBITDA of se activities between 2019 and 2025, and returns would fall from 6.5% to 4%. Renewables, in particular, estimate that “ approximately one-third of yields.”Faced with se prospects, y underline that y do not make “any recommendation to buy in region,” and, on contrary, recommend to sell, mainly EDP and Endesa, where y calculate a risk of falling up to 15%.

The impact on values of utilities of spain in Spanish Stock market in wake of se reflections was immediate, with falls between 1.75% and 3.15% on a day on which Ftse only fell 0.10%.

Sources of companies consulted have not hesitated to qualify report of investment bank of “harmful”. However, y also get in package is critical to responsible ministry, “y seem to enjoy doing damage to Spanish companies”, says a source.

Sources of Endesa, which is one of companies most noted, believe that argument of Goldman collides with that have been given most of analysts, who estimate an average price for electric Endesa of 20,22 euros. Yesterday this value was closed with a price of 20,02 eur.


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