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2014 2Q Results: Celsia - Buy

Sound financial results beat our estimates. Celsia remains our favorite player in the Colombian power sector.

Target Price: COP 7,120

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July 23, 2014 (www.investorideas.com newswire) We expected Celsia to continue posting sound financial results in line with the remarkable performance seen in 2013 and 1Q14, as the company should take advantage of the drought period, expectations of El Niño phenomenon in the 2H14, high power spot prices and higher thermal share in power generation. Celsia exceeded our expectations in terms of revenues, EBITDA and net income.

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The sound financial results were mainly explained by higher than expected sales in the spot market at very convenient prices (the average power spot price during 2Q14 was 364 COP/kWh, 112% higher than that observed in 2Q13). Also, as it was observed in 1Q14, EBITDA margin remained above 40%, and it was better than our 37.8% quarterly estimate and our 35.1% forecast for the whole year.

Regarding the company's expansion plan, as of June 30th the Cuacuana hydro project (55 MW) reached an 88% progress and the Bajo Tuluá hydro project (20 MW) reached an 86% progress. Both projects are expected to be operating by the end of this year. On the other hand, the company is still expecting the permits from the Environmental Regulator (ANLA) to begin the construction of the Porvenir II project (352 MW). We expected this permits to be granted in June, and now the company expect the permits to be approved in the 2H14.

We maintain our BUY recommendation in Celsia and our 2014 T.P. of COP 7,120. Celsia remains as our favorite player in the Colombian power sector.

Regards,
Credicorp Capital

La información contenida en este mensaje es confidencial y para conocimiento exclusivo del destinatario. La información y opiniones contenidas en este mensaje pertenecen únicamente al remitente, excepto cuando en el cuerpo del mensaje se establezca lo contrario y el remitente esté autorizado para enviar dicha información con carácter definitivo y oficial de Credicorp Capital. La información relacionada con su cuenta, los extractos, informes financieros y de productos, sólo será vinculante en la medida en que sea remitida por los canales y en los formatos que Credicorp Capital determine. Las opiniones, conclusiones o cualquier otra clase de información contenida en este correo no relacionadas con los fines del negocio de Credicorp Capital, deben entenderse como personales y bajo ninguna circunstancia son avaladas por Credicorp Capital. Si usted ha recibido este mensaje por error por favor proceda a eliminarlo, y notificar al remitente. De cualquier manera, usted no debe usar, divulgar, revelar, distribuir, imprimir, copiar o adulterar en forma parcial o total este mensaje. Credicorp Capital no se hace responsable por la eventual transmisión de virus o programas dañinos por este medio. Credicorp Capital, no se responsabiliza por eventuales daños o alteraciones como consecuencia de la recepción o uso del presente mensaje.

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