group presentation - draft 4

7/28/2019 Group Presentation - Draft 4

1/17

Equity Research Challenge 2012-2013

University of Waterloo

Presented by Group 3

Michael James

Niall MacGillivray

Indrajit Sen

Aman Taxali

Kenny Yan

TSX: EMA

NYSE: EMA

Equity Research Review


2/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Target Price: 38.69

Target Price: 38.692 20


3/17

10

15

20

25

30

35

40

45

1996 2001 2007 2012 2018

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Target Price: 38.692 20EMA Trading Prices

35.2310%


4/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Target Price: 38.692 20

10

15

20

25

30

35

40

45

1996 2001 2007 2012 2018

EMA Trading Prices

35.2310%


5/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Industry

Overview


6/17

Company Location Market Cap P/E EPS EPS Growth ROE Beta

Emera N.S. 4.62 20.1x 1.97 12% 18% 0.25

Fortis Nfld 6.43 20.5x 1.74 5% 12% 0.06

Central Maine Power Maine private - 3.48 19% 14% -Constellation Energy Maryland 7.52 - -4.90 18% -30% -

Public Service Energy N.J. 16.54 13x 2.51 23% 33% 0.44

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n


7/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Monte Carlo

150

300

450

600

750

900

Sell Hold Buy2% 71% 27%

Cash per Share Debt Per Share FCF Per Share Growth Rate

2.01 $28.63 $19.69 Variable

DCF components


8/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

S&P 500

Oct

2006

Feb

2008

May

2005

Jul

2009

Nov

2010

Apr

2012

Oct

2006

Feb

2008

May

2005

Jul

2009

Nov

2010

Apr

2012

Operating Income

Dividend Growth

Grows 54%

Grows 19%


9/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Jul

2009

Nov

2010

Apr

2012

Jul

2009

Nov

2010

Apr

2012

S&P 500

Oct

2006

Feb

2008

May

2005

Oct

2006

Feb

2008

May

2005

Operating Income

Dividend Growth

Grows 54%

Grows 19%


10/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Market Power

Threat of

Substitute

Products

ew

1 4

44

4

4 = Most Favourable to Emera

1 = Least Favourable to Emera

Forces BehindEmeras

Market Power


11/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Eastern North America


12/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Eastern North America


13/17

2012 Generation

Mix

Coal

Nat Gas

Renewables

2010 Generation

Mix

Coal

Nat Gas

Renewables

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Nova Scotia Power

Caribbean Power

and Utility

Maine Utility

Muskrat Falls

64%

20%

16%

68%66%

First Wind


14/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Nova Scotia Power

Caribbean Power

and Utility

Maine Utility

Muskrat Falls

64%

20%

16%

2012 Generation

Mix

Coal

Nat Gas

Renewables

66%

Business

Risks?


15/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Business

Risks?

Residential51%

Commercial28%

Industrial21%

Electric Sales Revenues by Client Type


16/17

Ratings

Summary

Ratio

Analysis

Investing in

Utilities

Diversificatio

n

Residential51%

Commercial28%

Industrial21%

Electric Sales Revenues by Client Type

Closing Thoughts


17/17

9.80% Employee growth rate

Rate change -5% -2% 0% 2% 5%

Price 26.83 33.09 38.69 45.72 59.58

Rate change -2% -1% 0% 1% 2%Price 57.49 43.94 38.69 35.56 33.29

345.00% Gross PPE as a % of NI

Rate change -5% -2% 0% 2% 5%

Price 40.3 39.33 38.69 38.04 37.08

Capex

Tax Rate 15%

Pension & Other Post-Retire. Benefits

Sensitivity Analysis

group presentation - draft 4

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