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Enel Russia: Waiting for the largest asset to be sold

In mid-2018, the shares of Enel Russia traded 27% below its February levels. More to it, from the dividend cut-off date in June, company’s capitalization decline by nearly 15% having not just failed to cover the dividend gap, but slipping even further. Is that enough for a panic? Not as we see it. Currently, the company is waiting for the event that might change its future radically.

We upgraded our DCF model, having included not only the updated assumptions, recent operation and financial numbers, but accounted the effect of wind stations, which Enel Russia was building. As for the last-mentioned fact, we suppose the company’s participation in given projects is positive as the future money flow on given projects is supported by increased payments for DPM of the RES for 15Y term. According to our calculations, NVP of wind stations forms RUB 930 mn, which adds RUB 0.025 to the target price. In our calculations, we concluded from the average load factor of the stations totaling 30%. The Company expects load factor of 40%. Then, according to our calculations, NPV possibly grows up to RUB 3 bn, adding RUB 0.08 per ENRU share.

Making our upgraded assumptions, we concluded from the 2018 output plunging 2% YoY, and starting to recover gradually afterwards.

Our target price of Enel Russia’ share totals RUB 1.63; TSR is 50.6%. The recommendation is “BUY”.


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