Publicação
Equity research - EDP Renováveis S.A. : integrating sustainability risks into the valuation
| Resumo: | The present document is the report of an Equity Research of EDP Renováveis, S.A. (EDPR). 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 in over 20 countries. This report issues a buy recommendation for EDPR, with a 2022YE price target of €24.7/share, applying a DCF FCFF Sum-of-the-Parts approach to each segment, to reflect all of its idiosyncrasies. The valuation comprises an upside potential of 24% from the January 12th, 2022 closing price of €19.9, with medium-low risk. To support this analysis, other valuation methods were used. Also, the valuation was subject to sensitivity analysis to address its risk. Following the original research, a complementary approach was carried out to integrate Sustainability risks and opportunities into EDPR’s valuation, aimed at ESGconcerned investors. By using a quantitative method, we manage to provide clarity about the magnitude of the adjustments performed to EDPR’s discount rate, through Europe and the United States’ beta, and make them comparable with the sector. Through our analysis, we found that ESG-concerned investors may face an investment opportunity by increasing their portfolio exposure to the company. Also, the same recommendation would be given to an investor which is solely concerned with the Environmental and Social pillars. Nonetheless, for an investor concerned with the Governance pillar, the recommendation would be to reduce the exposure of the portfolio to EDPR, until the market recognizes that some issues are fixed. The report was finalized on January 16th, 2022. By March 2022, an updated snapshot was created, to reflect the impacts of the military invasion of Ukraine |
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| Autores principais: | Amorim, Ana Rita Machado |
| Assunto: | Equity Research Valuation Mergers & Acquisitions Renewables Avaliação de Empresas Fusões & Aquisições Renováveis |
| 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: | The present document is the report of an Equity Research of EDP Renováveis, S.A. (EDPR). 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 in over 20 countries. This report issues a buy recommendation for EDPR, with a 2022YE price target of €24.7/share, applying a DCF FCFF Sum-of-the-Parts approach to each segment, to reflect all of its idiosyncrasies. The valuation comprises an upside potential of 24% from the January 12th, 2022 closing price of €19.9, with medium-low risk. To support this analysis, other valuation methods were used. Also, the valuation was subject to sensitivity analysis to address its risk. Following the original research, a complementary approach was carried out to integrate Sustainability risks and opportunities into EDPR’s valuation, aimed at ESGconcerned investors. By using a quantitative method, we manage to provide clarity about the magnitude of the adjustments performed to EDPR’s discount rate, through Europe and the United States’ beta, and make them comparable with the sector. Through our analysis, we found that ESG-concerned investors may face an investment opportunity by increasing their portfolio exposure to the company. Also, the same recommendation would be given to an investor which is solely concerned with the Environmental and Social pillars. Nonetheless, for an investor concerned with the Governance pillar, the recommendation would be to reduce the exposure of the portfolio to EDPR, until the market recognizes that some issues are fixed. The report was finalized on January 16th, 2022. By March 2022, an updated snapshot was created, to reflect the impacts of the military invasion of Ukraine |
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