Enersis SA ADRENI

Morningstar Rating

Stock Research and Analysis

by Morningstar Equity Analysts

A balanced mix of generation and distribution assets positions Enersis nicely to profit from South America's relatively fast-growing demand for power, in our opinion.

The regulatory environments in Enersis' top markets of Chile, Brazil, and Colombia Read more

Bulls Say

Enersis generates two thirds of its power from hydroelectric facilities, conferring it a low-cost advantage over competitors that are more dependent on thermal generation.

With above-average population growth, relatively large numbers of unconnected customers, and excellent potential for increased per capita consumption, Enersis enjoys strong long-term growth prospects.

Stable regulatory frameworks allow input cost pass-throughs, helping Enersis generate stable cash flows.

The company's diversification across five countries reduces currency and market risks.

Unlike many of its South American utility peers, government interests do not hold a majority stake in Enersis. Read more

Bears Say

Returns on invested capital have consistently lagged the firm's cost of capital.

Enersis is vulnerable to a depreciation of the local currencies in which it collects revenue, as half of its debt is dollar-denominated.

Energy theft and other losses totaling nearly 11% of electricity volume are a significant drain on operating income.

Neighboring Argentina has curtailed natural gas exports to Chile, implying higher operating costs at Enersis' generation subsidiary. Read more

Strategy

Enersis has partially reduced its exposure to hydrological conditions through contractual provisions that limit its liabilities during periods of drought. The company also aims to reduce energy losses, Read more

Management

With its 60% equity stake in Enersis, Endesa ELEYY controls electoral power of the company's board. A number of Enersis' directors and executives have strong ties to its parent. For instance, Enersis' new CEO, Ignacio Antonanzas, comes from Endesa, Read more

Profile

Enersis owns and operates electricity generation, transmission, and distribution assets in Chile, Argentina, Brazil, Colombia, and Peru. Its generation subsidiary, the largest Read more

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