Seeking Alpha: AES Tiete Very Attractive, But Very Hard To Own

It's a real shame that when AES (NYSE:AES) restructured the ownership of AES Tiete (TIET11.SA) it chose to cancel the ADR program. AES Tiete may not only be one of the most interesting assets within AES, but it is one of the more interesting and differentiated Brazilian electrical utilities. While it is technically possible for individual American investors to own shares traded in Brazil, it is not easy - not only can it be challenging to find a broker, there are language barriers to consider and serious issues of convenience and hassle. To put it another way, I periodically approach brokers about the possibility of opening an account and more than once the response has been along the lines of "which company do you like so much that you want to do all of this?"

All of that said, I think AES Tiete looks to be about 25% undervalued today, with a very clean balance sheet and strong upside to a long-term recovery in Brazilian electricity prices. For those who can buy Brazilian equities, I'd definitely recommend a closer look. For those who can't, maybe it's worth a spot on a watch list on the off chance that AES makes ADRs available once again.

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AES Tiete Very Attractive, But Very Hard To Own

Seeking Alpha: CPFL Energia One Of The Best ... And Priced Like It

It's tough out there for Brazilian utility companies, both in real-world market terms and the significantly fuzzier world of investor sentiment, and CPFL Energia's (NYSE:CPL) market performance would seem to lend more support to the notion that when times get tough enough, even the best get pulled down.

CPFL Energia has fared better than CEMIG (NYSE:CIG), COPEL (NYSE:ELP), Light (OTCPK:LGSXY), and Alupar over the past year with a roughly 3% decline in the local shares (and a 15% drop in the ADRs), and has lagged only Energias among the integrated distribution ("disco")/generation-transmission ("genco" and "transco") players in Brazil's electrical utility sector. Even so, it's been a rough stretch in the neighborhood as turbulence in the power industry, weakness in Brazil's economy, and a crisis of confidence in the equity and credit markets have done their damage.

As a company, I really like CPFL Energia. The debt level is high, but then so too is the near-term cash generation to cover it, and I believe there is a wide range of potential growth opportunities for the company. That said, everybody seems to agree that CPFL Energia is a well-run company and you don't often find bargains where there's that level of concordance.

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CPFL Energia One Of The Best ... And Priced Like It

Seeking Alpha: This Brazilian Company Offers Good Dividend And Cap Gains Upside , But Mind The Risks

Operating a regulated business in Brazil is no picnic, as investors in companies as diverse as Cosan (CZZ), Petrobras (PBR), AES (AES), and CEMIG (CIG) can attest. It's no less of an issue for COPEL (Companhia Paranaense de Energia) (ELP), as concession expirations in 2015 threaten both the generation and distribution businesses, and there are no guarantees that Brazilian authorities will continue to be reasonable with tariff adjustments for operators in the electrical utility sector.

It is not as though these risks are going uncompensated, though. COPEL is priced to yield about 5% today and does look meaningfully undervalued on the basis of 2014 EBITDA. What's more, Brazilian auctions are often predicated on construction costs and COPEL has a pretty good record of spending less than they initially expect. Couple that with an under-leveraged balance sheet and an underlying growing market that needs more power, and I think the combination of potential capital gains and higher dividends merits a closer look.

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This Brazilian Company Offers Good Dividend And Cap Gains Upside , But Mind The Risks

Investopedia: CEMIG Not The Cheap Dividend Stock It Appears To Be

The business of producing and supplying power in emerging market countries like Brazil isn't all its cracked up to be. While it's true that companies like CEMIG (NYSE:CIG) are poised to benefit from increasing electricity demand as Brazil continues to modernize and grow, Brazil is not the only emerging market to pursue a rather hard line with respect to regulation and tariffs. This has put CEMIG in the unenviable position of having to rely on M&A and cost efficiency for better performance, all while sporting a hefty debt load.

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Seeking Alpha: Can AES Get Out Of Its Parents' Basement?

When I last wrote on international utility operator AES (AES), a Seeking Alpha reader commented that the company reminded him of a person who consistently tests at a genius level IQ, but never actually amounts to anything in life. As a long-term holder of AES, that comment cuts a little close to home, as there always seems to be to some external excuse for what in retrospect has become a tradition of under-performance. Although there is still potential for this company to do better, you can go broke betting on potential in lieu of performance.

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Can AES Get Out Of Its Parents' Basement?

Seeking Alpha: AES Still Waiting For Stability To Translate Into Higher Multiples

Global utility company AES (AES) is still waiting to see some of the tangible benefits of its multiyear restructuring. AES has gotten a lot more realistic about its international growth plans, added the stability of a regulated utility, and sharpened its focus on generating (and distributing) cash flow instead of a growth-at-any-cost philosophy. Nevertheless, the shares have not exactly soared on this transition to the new AES.

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AES Still Waiting For Stability To Translate Into Higher Multiples

Seeking Alpha: AES - Above Average Growth, An Improving Balance Sheet, Higher Dividends

It has taken a number of years, but global electrical utility AES Corp. (AES) finally seems to have a plan in place that can drive reasonable returns for shareholders. While commodity costs and forex represent some challenges for the near term, AES has a good long-term plan in place with respect to driving out costs, focusing on high-potential growth markets, and seeing cash go back to shareholders.

Minimal Surprises In The Fourth Quarter
AES offered relatively few surprises for the fourth quarter. Revenue rose about 1% as reported, with the company's Latin American operations representing about two-thirds of the revenue base. Profitability was better, though, as GAAP gross margin, adjusted gross margin, and proportional gross margin all showed solid progress.

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AES: Above Average Growth, An Improving Balance Sheet, Higher Dividends

Seeking Alpha: Will AES Finally Make Good In 2012?

Waiting for global electrical utility operator AES to pay off as an investment has been a lot like waiting for Godot, though I don't remember so many disappointments in Beckett's play. Although AES has a great collection of power generation assets, it has for some time now and management has never yet managed to wring much value out of them. With new management and a new plan, perhaps long-suffering investors will see some rewards for their patience in 2012.

The New New Plan
Long-term investors in AES have heard enough new plans over the years that they should well be skeptical. In particular, AES has a long history of shuffling the deck – selling this or that project and investing hundreds of millions into the next “big thing” all in the hopes of generating some real returns from a large asset base. Heretofore, it hasn't worked out so well and investors would have frankly done better with a money-market account for the last decade.

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Will AES Finally Make Good In 2012?

Dynegy Finally Takes A Bid

This was not how the Dynegy (NYSE:DYN) story was supposed to end. One of the veterans of the independent power producer concept, Dynegy was supposed to have been able to leverage cheap coal-burning plants against higher electricity prices and produce streams of cash flow for shareholders. As with Reliant (NYSE:RRI), Mirant (NYSE:MIR), Calpine (NYSE:CPN) and NRG Energy (NYSE:NRG), the Dynegy story just never worked out according to plan.

Hamstrung by low natural gas prices, sluggish power prices and a lot of debt that came from seemingly ill-advised expansion, Dynegy has struggled to make a go of it. Instead of continuing the struggle, Dynegy decided to sell out to private equity giant Blackstone (NYSE:BX) for a total consideration of roughly $4.7 billion. Shareholders will get $4.50 of cash for each share if the deal goes through. 


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