Documente Academic
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Documente Cultură
GSZ.PA, GSZ FP
24.32
IPR.L, IPR LN
317p
Electric Utilities
Edmund Reid
Nathalie F Casali
(44-20) 7325-9023
nathalie.x.casali@jpmorgan.com
J.P. Morgan Securities Ltd.
IPR board considering the combination: IPR's board states that the
proposed combination has strategic rationale and there would be synergy
potential.
Low CO2 intensity: Both companies have generation fleets with low CO2
intensity and the combination of the two companies would leave the
combined group well placed if there are more restrictions on CO2 worldwide.
Capacity growth: The combined entity would have 7.4GW of net capacity
under construction, providing it with 18% capacity growth over the next 4
years.
Despite the strategic logic behind the deal, today's announcement contains no
information on timeline or merger ratios and as such it remains in its
preliminary stages.
North America
32%
Latin America
17%
AC
Europe
21%
Symbol
GSZ.PA
IPR.L
Mkt Cap
($ mn)
Price
Currency
EUR
GBp
Price
24.32
317
Rating
Cur
Prev
Price Target
Cur
Prev
Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. (R) under applicable law and/or J. P. Morgan Chase & Co policy the recommendation
and price target for this company have been removed. All prices as of 16 Jul 10.
See page 21 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Company Data
Price ()
Date Of Price
52-week Range ()
Shares O/S (mn)
24.32
16 Jul 10
31.34 - 22.64
2,261
2009A
2.11
14,012
2.03
11.5
7.2
6.0%
1.47
17.5%
2010E
1.89
14,824
2.19
12.9
7.0
6.2%
1.50
18.4%
2011E
2.12
16,214
2.09
11.5
6.5
6.4%
1.54
19.6%
2012E
2.20
16,978
2.20
11.1
6.2
6.5%
1.59
19.3%
2013E
2.24
17,438
2.24
10.8
5.9
6.7%
1.64
19.0%
2010E
29.48
10.7
1,337
6.9
659
2011E
27.30
11.6
1,258
7.2
601
2012E
31.02
10.2
1,327
6.6
695
2013E
32.84
9.6
1,363
6.2
744
3.6
3.6
3.2
2.8
13
4.0%
13
4.0%
13
4.0%
13
4.1%
Company Data
Price (p)
Date Of Price
52-week Range (p)
Shares O/S (mn)
317
16 Jul 10
354 - 243
1,529
Table of Contents
Summary ...................................................................................3
Overview of the combined entity ............................................4
Geographical split ........................................................................................................4
Fuel split ......................................................................................................................5
Contract split................................................................................................................6
Assets under construction ............................................................................................7
Comparison of Financials........................................................9
Appendix 1 IPR assets ........................................................13
Appendix 2 GDF Suez International Assets ......................15
This document is being provided for the exclusive use of UNIVERSIDAD ESAN at UNIVERSIDAD ESAN
Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Summary
Yesterday morning (July 19th) IPR made an announcement regarding a potential
corporate combination with GDFSuez. In our view the key points from the
announcement were:
Deal structure: GDFSuez would put its international assets (outside Europe) and
certain assets in the UK and Turkey into IPR and in return IPR would issue
shares to GDFSuez;
Retain London listing: The enlarged group would retain its listing on the
London Stock Exchange;
GDFSuez would be the majority shareholder
IPR board considering the combination: IPR's board states that the proposed
combination has strategic rationale and there would be synergy potential.
The exact text of the announcement is enclosed below.
The Board of International Power announces that it is in preliminary discussions
with GDF Suez SA ("GDF Suez") regarding a possible combination of International
Power and GDF Suezs Energy International Business Areas (outside Europe) and
certain assets in the UK and Turkey ("GDF Suez Energy International"), to create an
enlarged International Power which would be listed on the Official List of the
Financial Services Authority (Official List) and traded on the Main Market of the
London Stock Exchange. The Board of International Power believes that the possible
combination warrants consideration given the strategic rationale and potential for
synergies as a result of the combination and discussions are continuing between the
two parties regarding the terms of the proposed combination (including the amount
of net debt that would be contributed with GDF Suez Energy International). If the
combination were to be completed, it is expected that shares in International Power
would be issued to GDF Suez and that, as a result, GDF Suez would be the majority
shareholder in the enlarged International Power.
IPR and GDFSuez have previously discussed a business combination along these
lines. On 18th January 2010 IPR made an announcement stating that
it has held preliminary discussions regarding a potential combination of
International Power and certain power assets of GDF Suez S.A ("GDF Suez"). No
agreement was reached between International Power and GDF Suez and discussions
are no longer ongoing.
Yesterdays announcement provides considerably more detail regarding the potential
structure of any deal. Importantly, in our view, GDFSuez has provided new
disclosures regarding the assets which would be included in a potential transaction
with detailed financial information for the last three years. We believe that this
should allow shareholders to more closely evaluate the worth of the assets.
Our initial view is that there is considerable strategic rationale for a transaction.
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Geographical split
There is considerable geographical overlap between the two companies, specifically
in North America, the Middle East, Asia and the UK. This should provide synergies
around trading and also head office costs in those geographies. Overall, we think that
a combined group would remain geographically diversified, ensuring that it was not
overly reliant on a particular region.
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
9%
Austrlia
North America
16%
31%
Latin America
North America
34%
32%
Middle East
12%
UK & Turkey
Europe
32%
Asia
10%
Australia
8%
North America
32%
Latin America
17%
Europe
21%
Fuel split
Both IPR and GDF Suez International have low CO2 intensity generation capacity.
The installed capacity of both companies is heavily weighted towards gas (61% for
IPR and 58% for GDFSuez). In addition, both companies have significant renewable
capacity which means that they are well placed to deal with tightening controls on
CO2 emissions worldwide.
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Oil
Wind
3.0%
Pumped Storage 6.0%
Hy dro
2%
Fuel
Coal
7%
9%
0.5%
8.0%
Hy dro
24%
Coal
Gas
21.5%
61.0%
Gas
58%
Contract split
The structure of the contracts is slightly different. GDFSuez International has more
capacity under long-term contract than IPR. However, based on the proposed deal
structure announced, a combined entity should be quite evenly balanced between
long-term contracted and merchant assets. Importantly much of the exposure to
merchant markets will be in North America where electricity prices are below new
entrant levels and there have been signs of recovering demand.
Figure 8: IPR asset contract split (net capacity MW) at 31 December
2009
Pumped Storage
8.0%
Long term
Merchant
contracted
34%
34.0%
Uncontracted
28.0%
Wind
Short term
IPP
6.0%
66%
contracted
24.0%
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Asset/company
Fuel
GSZ
share
Gross capacity
Latin America
Net
capacity
-
Brazil
Jirau
Hydro
4,589
2,207
50.10%
3,450
1,728
442
Estreito
Hydro
40.70%
1,086
Andrade
Sugar cane
68.70%
33
23
Hydro
68.70%
20
14
339
196
E-CL-CTA
Coal
52.40%
150
79
E-CL-CTA
Coal
52.40%
150
79
Laja
Hydro
100%
39
39
115
115
Hydro
100%
Chile
Panama
Peru
115
115
364
225
Chilca
Natural gas
61.70%
250
154
Quitarasca
Natural gas
61.70%
114
70
5,407
2,743
Total
Middle East and Asia
Bahrain
Al Dur
Natural Gas
45.0%
1,233
555
Qatar
Ras Laffan C
Natural Gas
20.0%
2,730
546
3,821
764
Natural Gas
20.0%
2,091
418
Saudi Arabia
Riyadh
Natural Gas
20.0%
1,730
346
Oman
Barka 3/Sohar 2
Natural Gas
46.0%
1,440
662
Singapore
Senoko
Natural Gas
30.0%
750
225
Glow
Gheco One
Coal
Shuw eihat S2
Natural Gas
Thailand
na
1,087
427
na
na
660
na
20.0%
1,510
302
12,571
3,054
575
173
Total
North America
USA
Total
Total committed capacity as of June 2010
Natural Gas
30.0%
575
173
18,553
5,970
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Expected
completion date
% ownership
Net capacity
(MW)
Total investment
Proposed
capital structure
Contractual
position
Can$227m
(152m)
PPA 2030
Canada Wind
Canada
2010
100%
76
European Wind
Italy
2010
75%
23
Fujairah F2
UAE
2010
20%
400
Synergen
Australia
2010
100%
24
Merchant
HUBCO Narowal
Pakistan
2010
17%
36
PPA 2035
Elecgas
Portugal
2011
50%
415
580
Tolling to 2036
T Power
Belgium
2011
33%
140
448
Tolling 2026
Paiton 3
Indonesia
2012
31%
253
$1.2bn
PPA 2042
TNP2
Thailand
2012
100%
110
THB4.1bn
PPA 2037
HUBCO - Laraib
Pakistan
2013
13%
11
Total
Source: Company reports.
1,452
Regulated Tariff
$2,705
PPA to 2030
PPA 2038
This document is being provided for the exclusive use of UNIVERSIDAD ESAN at UNIVERSIDAD ESAN
Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Comparison of Financials
Table 3: International Power net income statement (m)
Total turnover
2009
2010E
2011E
2012E
2013E
3,526
3,515
3,686
3,890
4,066
Operating Profit
North America
100
109
127
153
181
Europe
561
491
398
418
371
Middle East
Australia
Asia
51
55
56
56
57
229
226
212
232
256
18
16
16
17
17
Corporate Costs
(52)
(53)
(55)
(56)
(53)
Operating Profit
907
844
755
819
828
34
26
27
28
28
Europe
68
47
42
43
46
Middle East
34
26
34
35
36
Australia
Asia
Total JV & Associates PAT
110
109
115
118
140
250
213
223
228
255
1,157
1,057
978
1,047
1,083
Net interest
(439)
(398)
(377)
(352)
(339)
718
659
601
695
744
718
659
601
695
745
(113)
(114)
(100)
(131)
(152)
Deferred Tax
Exceptional Tax
605
544
501
564
594
Minority interests
(97)
(92)
(80)
(82)
(78)
Earnings
508
452
421
482
516
Dividends
(191)
(192)
(193)
(194)
(205)
317
260
228
287
310
Retained profit
Source: J.P. Morgan estimates, Company data.
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Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
2009
2010E
2011E
2012E
2013E
11,364.0
11,404.5
11,459.0
11,522.8
11,617.1
251.0
251.0
251.0
251.0
251.0
869.0
869.0
869.0
869.0
869.0
Current liabilities
(875.0)
(874.6)
(874.6)
(874.6)
(874.6)
(109.0)
(108.6)
(108.6)
(108.6)
(108.6)
Total Assets
11,255.0
11,296.0
11,350.4
11,414.3
11,508.5
(5,059.0)
(4,747.5)
(4,494.1)
(4,188.4)
(3,864.1)
(91.0)
(91.0)
(91.0)
(91.0)
(121.0)
Deferred Taxation
(867.0)
(867.0)
(867.0)
(867.0)
(867.0)
Net assets
4,812.0
5,164.5
5,472.3
5,841.9
6,230.4
0.0
0.0
0.0
0.0
0.0
761.0
761.0
761.0
761.0
761.0
436.0
436.0
436.0
436.0
436.0
145.0
145.0
145.0
145.0
145.0
Capital Reserve
422.0
422.0
422.0
422.0
422.0
2,381.0
2,641.1
2,869.3
3,156.8
3,467.1
10
285.0
377.3
456.9
539.1
617.4
4,811.0
5,163.5
5,471.3
5,840.9
6,229.4
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2009
2010E
2011E
2012E
1,143.0
544.5
501.0
564.1
2013E
593.8
546.0
397.9
376.5
352.1
339.3
159.0
114.1
100.0
131.2
151.9
(276.0)
(212.8)
(222.9)
(228.3)
(254.7)
378.0
280.0
280.0
280.0
280.0
(359.0)
0.0
0.0
0.0
0.0
(51.0)
0.0
0.0
0.0
30.0
146.0
146.0
146.0
146.0
146.0
(148.0)
(153.8)
(157.6)
(161.5)
(165.6)
(8.0)
0.0
0.0
0.0
0.0
(311.0)
0.0
0.0
0.0
0.0
Goodwill Amortisation
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
(Increase)/decrease in stocks
9.0
0.0
0.0
0.0
0.0
(Increase)/decrease in debtors
151.0
0.0
0.0
0.0
0.0
Increase/(decrease) in creditors
(59.0)
0.0
0.0
0.0
0.0
1,320.0
1,116.0
1,023.1
1,083.6
1,120.7
Cash Tax
(105.0)
(114.1)
(100.0)
(131.2)
(151.9)
Cash Interest
(430.0)
(397.9)
(376.5)
(352.1)
(339.3)
785.0
603.9
546.6
600.2
629.5
(115.0)
(100.0)
(100.0)
(100.0)
(100.0)
Financial investments
(18.0)
0.0
0.0
0.0
0.0
556.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Hedging
0.0
0.0
0.0
0.0
0.0
1,208.0
503.9
446.6
500.2
529.5
Dividends paid
(195.0)
(192.4)
(193.2)
(194.5)
(205.2)
Shares issued
3.0
0.0
0.0
0.0
0.0
(889.0)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
(78.0)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
49.0
311.5
253.3
305.7
324.3
11
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865
477
286
(48)
2008A
1,792
13%
1,007
557
268
27
(67)
2009A
1,979
10%
1,026
657
286
85
(75)
1,219
731
335
207
(54)
1,380
861
417
189
(87)
1,423
835
423
197
51
(84)
1,093
745
200
203
(54)
1,267
880
199
403
(124)
(91)
1,293
714
176
398
70
(65)
(272)
(252)
30.7%
19
589
(348)
(373)
40.6%
16
562
(334)
(329)
34.6%
18
648
Capex
Latin America
North America
Middle East and Asia
UK and Turkey
621
387
180
54
-
3,276
1,189
1,022
1,041
24
2,199
1,406
376
224
193
Capital employed
Latin America
North America
Middle East and Asia
UK and Turkey
6,926
2,554
2,769
1,603
-
11,006
3,506
4,788
2,473
239
13,266
5,224
4,869
2,659
514
Net debt
o/w internal financial net debt
5,113
2,970
7,662
3,274
8,872
3,548
3.2x
4.3x
4.5x
EBITDA
% growth
Latin America
North America
Middle East and Asia
UK and Turkey
Other
ND:EBITDA
Source: J.P. Morgan estimates, Company data.
12
2007A
1,580
2010E
2,162
9%
1,165
724
295
53
(75)
2011E
2,367
9%
1,331
760
324
27
(75)
2012E
2,669
13%
1,444
781
492
28
(75)
2,058
1,301
842
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Fuel/type
Gross
capacity
MW(1)
IPR
Ownership
(IPM
Ownership)
Net
capacity
MW
Contractual
Position
Canada
Wind
40
100%
40
Illinois
Massachusetts
Massachusetts
Massachusetts
Ohio
Pennsylvania
Texas
Texas
Texas
Texas
West Virginia
Puerto Rico
Gas
Gas (CCGT)
Gas (CCGT)
Gas (CCGT)
Gas/Oil
Gas/Oil
Coal
Gas (CCGT)
Gas (CCGT)
Gas (Cogen/CCGT)
Gas/Oil
LNG (CCGT)
303
539
488
160
616
625
667
913
1,423
440
313
548
7,075
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
35% (50%)
303
539
488
160
616
625
667
913
1,423
220
313
192
6,499
Regulated
Tariff
Merchant
Merchant
Merchant
Merchant
Merchant
Merchant
Contracted
Merchant
Merchant
PPA 2014
Merchant
PPA 2022
Wind
1,189
100%
1,189
ISAB
Tejo Enegia (Pego)
Turbogas
Spanish Hydro
Germany/France/Netherlands/It
aly
Italy
Portugal
Portugal
Spain
Gas (IGCC)
Coal
Gas (CCGT)
Hydro/Solar
562
628
1,008
88
34% (49%)
50%
100%
67% (95%)
193
314
1,008
58
Uni-Mar (Marmara)
Deeside
Derwent
Indian Queens
First Hydro
Rugeley
Turkey
UK
UK
UK
UK
UK
488
500
214
140
2,088
1,050
33%
75% (100%)
23% (33%)
75% (100%)
75% (100%)
75% (100%)
162
375
49
105
1,566
788
Saltend
Europe total in operation
Middle East
Hidd
UK
Gas (CCGT)
Gas (CCGT)
Gas (CCGT)
Oil (OCGT)
Pumped Storage
Coal (50 MW of
OCGT)
Gas (CCGT/Cogen)
1,200
9,155
75% (100%)
900
6,707
Merchant
1,006
40%
402
PPA 2027
Al Kamil
Oman
Gas
(CCGT)/desalination
Gas (OCGT)
276
65%
180
PPA 2017
Ras Laffan B
Qatar
1,055
40%
422
PPA 2033
Tihama
Shuweihat S1
Saudi Arabia
UAE
Gas
(CCGT)/desalination
Gas (Cogen)
Gas
(CCGT)/desalination
1,076
1,572
60%
20%
646
314
PPA 2026
PPA 2025
Umm Al Nar
UAE
Gas
(CCGT)/desalination
2,450
20%
490
PPA 2026
North America
IPR Canada Wind Portfolio
Calumet
Bellingham
Blackstone
Milford
Troy
Armstrong
Coleto Creek
Hays
Midlothian
Oyster Creek
Pleasants
EcoElectrica
North America total in operation
Europe
IPR European Wind Portfolio
Bahrain
7,435
South Australia
South Australia
South Australia
Victoria
Wind
Gas (CCGT)
Gas/distillate
Coal
46
487
371
1,675
Regulated
Tariff
PPA 2020
PPA 2021
PPA 2024
PPA 2030 2065
PPA 2020
Merchant
PPA 2010
Merchant
Merchant
Merchant
2,454
100%
100%
100%
92%
46
487
371
1,541
PPA 2015
Merchant
Merchant
Merchant
13
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Loy Yang B
Victoria
Coal
1,026
70% (100%)
718
PPA 2016
Kwinana
Australia total in operation
Asia
Paiton
Western Australia
Gas (CCGT)
118
3,723
49% (70%)
58
3,221
PPA 2021
Indonesia
Coal
1,365
31% (45%)
423
PPA 2040
HUBCO
Pakistan
Oil
1,290
17%
219
PPA 2027
KAPCO
Pakistan
1,600
36%
576
PPA 2021
Gas/Oil (CCGT)
Gas (Cogen)
572
143
4,970
32,358
75%
100%
429
143
1,790
20,671
PPA 2023
PPA 2025
Uch
Pakistan
TNP (Pluak Daeng)
Thailand
Asia total in operation
TOTAL in operation around the world
Source: Company reports.
14
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Asset/company
Fuel
GSZ share
Tractebel Energia
68.70%
E-CL
Electroandina
Eolica Monte Redondo
52.40%
52.40%
100%
Wind
90%
51%
100%
Enersur
61.70%
Jirau
Estreito
Andrade
PCH Airea Branca
Hydro
Hydro
Sugar cane
Hydro
50.10%
40.70%
68.70%
68.70%
E-CL-CTA
E-CL-CTA
Laja
Alternergy and Bontex
Chilca and Quitarasca
Coal
Coal
Hydro
Hydro
Natural Gas/Hydro
52.40%
52.40%
100%
100%
61.7%
Litoral gas
Gas distribution
64%
1701km of pipeline
Mejillones
LNG terminal
50%
Distrinor
52%
TGP
Gas transportation
8%
Ventus - Norway
Ventus - West Cape
West Windsor Power
Ventus - Caribou
Wind
Wind
Natural Gas
Wind
100.0%
100.0%
96.1%
100.0%
Tractebel Energia
Natural Gas
100.0%
Natural Gas
58.5%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
50.0%
100.0%
100.0%
66.9%
39.2%
Costa Rica
Panama
Peru
Total existing Latin America
Committed power generation projects Latin America
Brazil
Chile
Panama
Peru
Total committed Latin America
Non power generation assets Latin America
Argentina
Gross capacity
(MW)
Net cap.
(MW)
7,378
7,378
1,729
653
1,038
38
50
50
324
241
83
1,043
1,043
10,524
5,069
5,069
924
342
544
38
45
45
206
123
83
644
644
6,887
2,207
1,728
442
23
14
196
79
79
39
115
225
2,743
4,589
3,450
1,086
33
20
339
150
150
39
115
364
5,407
Chile
Gasoductor Norandino
Peru
Existing power generation assets North America
Canada
Mexico
USA
729km of pipelines
319
9
99
112
99
279
279
6,775
575
315
9
99
108
99
279
279
6,079
336
1,186
27
45
343
1,538
10
365
746
287
51
56
20
1,186
27
45
343
1,538
10
365
746
144
51
56
13
15
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100.0%
GSZ share
Gross capacity
SUEZ - DEGS
Syracuse Energy Corporation
Tractebel Northeast Generation GP,
Inc - Bellingham
Trigen
Viking Energy
Wharton County Generation
Winooski One Partnership
Wise County Power Company
100.0%
100.0%
248
65
304
Net
capacity
65
304
100.0%
100.0%
50.0%
100.0%
56
33
67
7
746
7,373
33
67
4
746
6,672
Natural Gas
30.0%
575
173
575
173
Country
LNG terminal
LNG terminal
Energy transport and distribution
Gas distribution
Gas distribution
100.0%
100.0%
17.0%
100.0%
100.0%
100.0%
Natural Gas
Natural Gas
Coal
Hydro
45.0%
30.0%
27.4%
69.8%
Natural Gas
Natural Gas
Natural Gas
Fuel Oil, Natural Gas
Natural Gas, Coal
Natural Gas
Natural Gas
Natural Gas
47.5%
45.0%
47.5%
30.0%
69.1%
95.0%
20.0%
19.8%
Izgaz
Overall transportation
1,892
954
938
24
153
1,928
665
585
678
3,300
1,708
763
1,592
660
711
429
281
7
107
901
316
263
322
990
1,180
725
318
131
11,996
5,063
1,233
2,730
3,821
750
1,087
427
660
1,510
12,571
555
546
764
225
0
na
na
302
3,054
Natural Gas
Natural Gas
Natural Gas
Natural Gas
45.0%
20.0%
20.0%
30.0%
na
na
20.0%
Gas distribution
40.0%
na
Natural gas
Natural gas
Wind
Retail
100.00%
100.00%
100.00%
100%
2,105
1,875
210
20
n/a
2,105
Gas distribution
90%
2900km network
31,998
18,553
2,105
1,875
210
20
2,105
20,727
5,970
This document is being provided for the exclusive use of UNIVERSIDAD ESAN at UNIVERSIDAD ESAN
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edmund.reid@jpmorgan.com
JPM Q-Profile
GDF Suez S.A. (FRANCE / Utilities)
As Of: 16-Jul-2010
Quant_Strategy@jpmorgan.com
Current:
25.33
Current:
2.10
3.50
50.00
45.00
3.00
40.00
2.50
35.00
30.00
2.00
25.00
1.50
20.00
15.00
1.00
10.00
0.50
5.00
12Mth fwd EY
Current:
France BY
8%
Current:
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
0.00
Jun-95
0.00
-3.89%
0.50
Proxy
0.40
10%
0.30
8%
0.20
0.10
6%
0.00
4%
-0.10
2%
-0.20
PE (1Yr Forward)
Current:
12.0x
18.0x
Current:
PBV hist
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Price/Book Value
3.0x
16.0x
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
-0.30
Jun-95
0%
0.9x
PBV Forward
2.5x
14.0x
12.0x
2.0x
10.0x
1.5x
8.0x
6.0x
1.0x
4.0x
0.5x
2.0x
ROE (Trailing)
Current:
7.59
Current:
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
0.0x
Jun-95
0.0x
6.26
7.0
50.00
45.00
6.0
40.00
5.0
35.00
30.00
4.0
25.00
3.0
20.00
15.00
2.0
10.00
1.0
5.00
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
0.0
Jun-95
0.00
Summary
GDF Suez S.A.
FRANCE
Utilities
12mth Forward PE
P/BV (Trailing)
Dividend Yield (Trailing)
ROE (Trailing)
Implied Value of Growth
72368.35
176.6164 SEDOL
B0C2CQ3
Multi-Utilities
Latest
Min
12.04x
9.04
0.93x
0.86
6.26
0.00
7.59
7.59
-3.9%
-0.26
Max
16.75
2.49
6.31
47.46
0.31
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs
Median
13.40
2.01
3.17
15.26
0.15
Average
13.23
1.76
3.55
17.01
0.13
2 S.D.+
16.52
2.82
6.88
36.49
0.39
2 S.D. 9.95
0.70
0.22
-2.47
-0.14
% to Min
-25%
-7%
-100%
0%
-558%
As Of:
Local Price:
EPS:
% to Max % to Med
39%
11%
167%
116%
1%
-49%
526%
101%
903%
486%
16-Jul-10
25.33
2.10
% to Avg
10%
89%
-43%
124%
431%
* Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)
17
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JPM Q-Profile
International Power PLC (BRITAIN / Utilities)
As Of: 16-Jul-2010
Quant_Strategy@jpmorgan.com
Current:
3.20
Current:
0.29
0.70
6.00
0.60
5.00
0.50
4.00
0.40
0.30
3.00
0.20
2.00
0.10
1.00
0.00
12Mth fwd EY
9%
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-10
Jun-09
Jun-08
Current:
US BY
Current:
-14.14%
Jun-09
25%
Jun-07
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
-0.10
Jun-95
0.00
0.80
Proxy
0.60
20%
0.40
0.20
15%
0.00
-0.20
10%
-0.40
-0.60
5%
-0.80
Current:
23.90
40.00
1.1x
Current:
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
PBV Forward
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-10
Jun-08
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-97
Jun-98
Current:
PBV hist
Jun-95
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
0.0x
Jun-04
0.0x
Jun-03
0.5x
Jun-02
1.0x
5.0x
Jun-01
10.0x
Jun-00
1.5x
Jun-99
2.0x
15.0x
Jun-98
20.0x
Jun-97
2.5x
Jun-96
25.0x
Jun-95
3.0x
ROE (Trailing)
Jun-96
Price/Book Value
Jun-97
11.0x
Jun-95
Jun-10
Jun-09
Jun-08
Current:
30.0x
Jun-96
PE (1Yr Forward)
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
-1.00
Jun-95
0%
4.17
45.0
40.0
30.00
35.0
20.00
30.0
25.0
10.00
20.0
0.00
15.0
10.0
-10.00
5.0
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
Jun-95
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
Jun-97
Jun-96
0.0
Jun-95
-20.00
Summary
International Power PLC
BRITAIN
Utilities
12mth Forward PE
P/BV (Trailing)
Dividend Yield (Trailing)
ROE (Trailing)
Implied Value of Growth
7480.34
26.121 SEDOL
0632016
Independent Power Producers &
Latest
Min
Max
10.97x
4.76
24.66
1.07x
0.52
2.79
4.17
0.00
39.63
-13.42
37.21
23.90
-14.1%
-0.87
0.61
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs
18
Median
10.65
1.40
2.49
18.17
-0.03
Average
11.07
1.53
5.60
15.04
-0.05
2 S.D.+
19.40
2.68
22.85
36.49
0.67
2 S.D. 2.73
0.39
-11.66
-6.41
-0.77
% to Min
-57%
-52%
-100%
-156%
-518%
As Of:
Local Price:
EPS:
% to Max % to Med
125%
-3%
160%
30%
850%
-40%
56%
-24%
530%
81%
* Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)
16-Jul-10
3.20
0.29
% to Avg
1%
43%
34%
-37%
63%
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FY09
FY10E
FY11E
FY12E
Valuation ratios
FY13E in millions, year end Dec
Sales
EBITDA
Gross Operating Profit
Depreciation & Amortisation
Operating Profit
Associate Income
Net Interest
Profit before tax
Income Tax
Minority Interests
Group Net profit
79,908
14,012
14,012
5,183
8,347
403
1,266
6,547
1,719
753
4,478
80,640
14,824
14,824
5,618
8,732
425
1,626
7,485
2,088
847
4,976
82,897
16,214
16,214
5,995
9,724
413
1,758
7,607
2,434
828
4,758
87,798
16,978
16,978
6,219
10,255
421
1,828
8,128
2,682
869
4,998
91,567
17,438
17,438
6,380
10,538
429
1,811
8,428
2,865
888
5,104
FY09
14,012
(1,377)
1,988
13,627
-8,369
-8,369
(4,028)
-4,091
10,426
6,398
FY10E
14,824
(1,638)
(171)
12,587
-9,228
-9,228
(3,950)
-5,576
10,781
6,831
FY11E
16,214
(2,226)
(385)
13,505
-8,666
-8,666
(4,023)
-5,781
11,892
7,868
FY12E
16,978
(2,682)
(346)
13,843
-7,701
-7,701
(4,155)
-5,983
12,669
8,514
Cashflow statement
in millions, year end Dec
EBITDA
Cash Tax Payable
Working Capital
Cash flow from operations
Capex & Acquisitions
Cash from investing
Dividends paid
Cash from financing
Free Cash flow before dividends
Free Cash Flow
Balance Sheet
in millions, year end Dec
FY09 FY10E FY11E FY12E
Non Current assets
122,278 127,290 130,467 132,396
Current assets
49,146 47,145 46,872 48,484
Total assets
171,424 174,435 177,338 180,880
Total Debt
42,272 43,105 43,105 43,105
Shareholders' equity
65,527 67,761 69,752 72,252
Other liabilities
29,838 30,288 30,496 30,496
Total liabilities
171,424 174,435 177,338 180,880
Net debt
29,967 32,532 33,960 33,801
Capital Employed
89,038 94,537 97,600 99,417
Source: Company reports and J.P. Morgan estimates.
P/E (recurrent)
P/E (reported)
Price to book value
EV/EBITDA
EV/EBIT
FCF yield (%)
Dividend yield (%)
FY09
FY10E
FY11E
FY12E
FY13E
13.5
12.0
0.3
7.2
12.0
9.9%
5.2%
15.1
11.1
0.3
7.0
11.8
10.6%
5.3%
13.4
11.6
0.3
6.5
10.8
12.2%
5.4%
13.0
11.1
0.3
6.2
10.2
13.2%
5.6%
12.7
10.8
0.3
5.9
9.7
13.0%
5.8%
Per share
19
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edmund.reid@jpmorgan.com
Valuation ratios
FY09
FY10E
FY11E
FY12E
Sales
3,526
3,515
3,686
3,890
- P/E (reported)
9.5
10.7
11.6
10.2
9.6
378
280
280
280
Operating Profit
907
844
755
819
828 EV/EBITDA
6.3
6.9
7.2
6.6
6.2
0 EV/EBIT
10.6
11.0
12.0
10.7
10.1
FY13E
Associate Income
Net Interest
Profit before tax
Income Tax
Minority Interests
Discontinued items
Group Net profit
(439)
(398)
(377)
(352)
718
659
601
695
(113)
(114)
(100)
(131)
(97)
(92)
(80)
(82)
508
452
421
482
Cashflow statement
in millions, year end Dec
FY09
FY10E
FY11E
FY12E
Recurrent EPS
33.39
29.48
27.30
31.02
32.84
Reported EPS
33.39
29.48
27.30
31.02
32.97
Reported DPS
13
13
13
13
13
FY13E
Working Capital
101
629
1,116
1,023
1,084
441
-100
FY09
FY10E
FY11E
FY12E
- Operating margin
-7.0% -10.6%
8.5%
1.1%
Dividends paid
1,119 %
(195)
(192)
(193)
(194)
- Reported ROE
- ROCE (EBIT)
Net debt/ (equity+minorities) (%)
Balance Sheet
- Market valuation
10.5%
-
0.0%
0.0%
0.0%
0.0%
0.0%
5.1%
4.6%
4.0%
3.6
3.6
3.2
2.8
FY09
FY10E
FY11E
FY12E
FY13E
4,811
5,163
5,471
5,841
317
1,521.3 1,533.7 1,543.7 1,553.7 1,563.7
Total liabilities
Net debt
-5,059
-4,747
-4,494
Capital Employed
9,871
9,912
9,598
9,286
9,033
8,727
8,403
20
FY13E
-4,188
-3,864 EV adjustment
This document is being provided for the exclusive use of UNIVERSIDAD ESAN at UNIVERSIDAD ESAN
Edmund Reid
(44-20) 7155 6676
edmund.reid@jpmorgan.com
Analyst Certification:
The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily
responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with
respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research
analysts compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the
research analyst(s) in this report.
Important Disclosures
Market Maker/ Liquidity Provider: JPMSL and/or an affiliate is a market maker and/or liquidity provider in GDF SUEZ,
International Power.
Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of
International Power: Richard Stuber.
Client of the Firm: GDF SUEZ is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to the
company investment banking services, non-investment banking securities-related services and non-securities-related services.
International Power is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to the company
non-investment banking securities-related services and non-securities-related services.
Investment Banking (past 12 months): JPMSI or its affiliates received in the past 12 months compensation for investment banking
services from GDF SUEZ.
Investment Banking (next 3 months): JPMSI or its affiliates expect to receive, or intend to seek, compensation for investment
banking services in the next three months from GDF SUEZ, International Power.
Non-Investment Banking Compensation: JPMSI has received compensation in the past 12 months for products or services other
than investment banking from GDF SUEZ, International Power. An affiliate of JPMSI has received compensation in the past 12
months for products or services other than investment banking from GDF SUEZ, International Power.
Broker: J.P. Morgan Securities Ltd. and/or an affiliate acts as Corporate Broker to International Power.
48
Price()
Price Target
()
02-Sep-09 N
28.86
33.00
19-Feb-10
27.20
33.00
OW
OW 33
36
24
12
0
Sep
06
Jun
07
Mar
08
Dec
08
Sep
09
Jun
10
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Jul 22, 2008 - Sep 02, 2009. This chart shows J.P. Morgan's continuing coverage of this stock; the
current analyst may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.
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798
OW 520p
684
OW 540p
OW 360p
N 345p
OW 370p
N 340p
570
OW 410pOW 470p
Price(p)
OW 539.99p OW 400p
OW 350p
OW
456
342
228
114
0
Feb
07
May
07
Aug
07
Nov
07
Feb
08
May
08
Aug
08
Nov
08
Feb
09
May
09
Aug
09
Nov
09
Feb
10
May
10
Price Target
(p)
07-Mar-07 OW
376
410
01-Aug-07 OW
414
470
02-Jul-08
OW
436
540
16-Jul-08
OW
419
540
08-Sep-08 OW
363
520
17-Nov-08 OW
263
400
16-Jan-09 OW
257
370
19-Mar-09 OW
210
360
20-Jul-09
251
350
OW
01-Mar-10 OW
324
--
26-Mar-10 N
330
340
08-Jul-10
315
345
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage Jul 11, 2008 - Jul 16, 2008, and Feb 26, 2010 - Mar 01, 2010. This chart shows J.P. Morgan's
continuing coverage of this stock; the current analyst may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.
Coverage Universe: Edmund Reid: Centrica (CNA.L), Drax (DRX.L), International Power (IPR.L), National Grid (NG.L),
Pennon (PNN.L), Scottish & Southern Energy (SSE.L), Severn Trent (SVT.L), United Utilities (UU.L)
J.P. Morgan Equity Research Ratings Distribution, as of June 30, 2010
Overweight
(buy)
46%
49%
44%
68%
Neutral
(hold)
42%
46%
48%
61%
Underweight
(sell)
12%
31%
9%
53%
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