Publicação
Equity research - EDP Renováveis S.A. : hybridization is a real option
| Resumo: | This project is an Equity Research on EDP Renováveis, S.A. (EDPR), with a special focus on valuing a new hybrid project under a Real Options perspective. EDPR is a leading global renewable energy company, that develops, constructs, and operates onshore wind farms, solar energy plants and offshore wind projects to deliver clean energy to its customers. The company was valued using a Sum-of-the-Parts approach, where a discounted cash flow model was applied for all segments, reflecting all its idiosyncrasies. The valuation yielded a final price target of €24.7/sh. A complementary analysis of the new hybrid project in Portugal using Real Options was carried out, since it was announced after the initial report was finalized. As with any renewable project, hybrid parks are strictly regulated, and licenses can be declined, which may cause delays or refusals of construction. This means that the development phase is influenced by uncertainties before the construction stage is reached, which will determine whether the park is constructed or not. By incorporating the probabilities of success associated with each stage, it was concluded that the Net Present Value would undervalue the project by €7.3M. This is mainly because this approach considers that the investment, once taken, is irreversible and that the development is a success. Therefore, Real Options were used, as this approach incorporates managerial flexibility, allowing producers to make decisions during the execution of the project. |
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| Autores principais: | Panóias, Rita Isabel Correia |
| Assunto: | Equity Research Valuation Mergers & Acquisitions Real Options Renewables Hybridization Avaliação de Empresas Fusões & Aquisições Opções Reais Renováveis Hibridização |
| Ano: | 2022 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório da Universidade de Lisboa |
| Resumo: | This project is an Equity Research on EDP Renováveis, S.A. (EDPR), with a special focus on valuing a new hybrid project under a Real Options perspective. EDPR is a leading global renewable energy company, that develops, constructs, and operates onshore wind farms, solar energy plants and offshore wind projects to deliver clean energy to its customers. The company was valued using a Sum-of-the-Parts approach, where a discounted cash flow model was applied for all segments, reflecting all its idiosyncrasies. The valuation yielded a final price target of €24.7/sh. A complementary analysis of the new hybrid project in Portugal using Real Options was carried out, since it was announced after the initial report was finalized. As with any renewable project, hybrid parks are strictly regulated, and licenses can be declined, which may cause delays or refusals of construction. This means that the development phase is influenced by uncertainties before the construction stage is reached, which will determine whether the park is constructed or not. By incorporating the probabilities of success associated with each stage, it was concluded that the Net Present Value would undervalue the project by €7.3M. This is mainly because this approach considers that the investment, once taken, is irreversible and that the development is a success. Therefore, Real Options were used, as this approach incorporates managerial flexibility, allowing producers to make decisions during the execution of the project. |
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