Trading Idea: EDP Renovaveis SA (EDPR-PT)
EDP Renovaveis is a € 22.2 Bn market cap and a Portuguese-based company active in the renewable energy sector. The Company focused on the production of energy from renewable resources. The Company's activities comprise the development, operation and maintenance of such electric power stations as hydroelectric, wind, solar, tidal, biomass and waste plants, among others. It operates in Spain, Portugal, Belgium, France, Italy, Poland, Romania, the United Kingdom, Brasil, the United States, as well as Canada.
EDPR reported strong financial performance in H1-21, driven by Europe & Brazil, while impacted by one-offs, lower generation in US and lower capital gains. Asset rotation execution has been strong with €1.9 Bn of proceeds secured at attractive multiples and €101M, gain already booked, on track to deliver > 300Mn capital gains.
The company is expanding its footprint in China, Poland, UK and Latam to tap further growth opportunities. EDPR’s portfolio increased to 12.6 GW with +2.1 GW yoy, and still have 2.9 GW under construction.
EDPR is expected to post a € 1.85 Bn revenue in 2021 (+6.9% yoy) coupled with a 53 % operating margin. Revenue growth is expected to accelerate in 2022 (+12%) and 2023 (+11%), coupled with a stabilized operating margin at c.51%. The net debt is expected to stabilize in 2021 at €3.3 Bn, but to expand again from 2022, corresponding to the ramping up in renewable capacities.
EDPR is a growth story, within the European Utilities sector, with a critical size and strong quality of assets. The current dividend yield is therefore limited at 0.4%.
Short term catalyst : Capacities ramping up.
This signal looks consistent with the European Utilities sector in Major Bullish Trend.