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Enron Mail |
Good Morning,
Attached, please find the latest issue of our Independent Power Weekly. <<IPW052101.doc<< Summary: 1. IPPs Rise 4.6% Last week our IPP composite closed up 4.6%, outperforming both the NASDAQ (+4.3%) and the S&P 500 (+3.7%). NRG Energy and Mirant Corp. were the strongest performers in the group, rising 8.0% and 7.9%, respectively. International Power was the weakest performer, falling 1.2%. 2. Mirant Shines at Analyst Meeting The major event last week was Mirant's analyst meeting on Monday and Tuesday (5/14 and 5/15). Following the meeting, we raised out target price to $62 from $48. We left the meeting with 3 major conclusions: 1) The whole is greater than the sum of the MWs; 2) Mirant is executing; 3) Mirant is undervalued. We believe investors have overlooked the value in MIR's integrated asset/trading and marketing energy merchant platform by solely focusing on the company's power generation business. MIR clearly represents one of the best values in the IPP group. The stock is trading at 23.9 times our 2001 EPS estimate, which represents a 14% discount to the IPP group average of 27.8x. 3. President's "Free Market" Based Energy Plan Positive for IPPs On Thursday (5/17), President Bush presented the framework of a comprehensive national energy plan that emphasizes more supply, efficiency, fuel diversity, and conservation. To the extent the plan emphasizes "free market" approaches to solving the nation's energy shortages, we regard it as positive for the Independent Power Producers. The plan resists calling for interventionist measures, such as price caps, to mitigate high wholesale power prices. In addition, the report attributes the California power crisis to poor public policy and a fundamental supply/demand imbalance. It does not embrace the theory, put forth by many local California politicians, that power generator market manipulation and price gouging gave rise to the situation. 4. NERC Releases Summer Assessment Report On May 15, the North American Reliability Council (NERC) published 2001 Summer Assessment Report. NERC believes that going into the Summer most regions of the US have adequate generation resources to meet demand, barring a major heat wave or an unplanned outage of a large plant. However, the study finds California and the Northwest to be major areas of concern. Further, the report cites Texas, New England and New York City as areas that should be closely watched. 5. Looking Ahead: Brazilian Government to Announce Measures to Increase Power Supply This week the Brazilian government is expected to unveil a series of proposals to stimulate generation supply, which should include the removal of regulatory obstacles to new investment. We believe this announcement will be positive for AES Corp. shares. Recently, management indicated it would suspend nearly $2 billion of planned Brazilian generation investments due to regulatory issues that have impeded AES's ability to finance these investments. The removal of these project financing impediments would result in an important growth opportunity for the company. Regards, Neil Stein 212/325-4217 Bryan Sifert 212/325-3906 This message is for the named person's use only. It may contain confidential, proprietary or legally privileged information. No confidentiality or privilege is waived or lost by any mistransmission. If you receive this message in error, please immediately delete it and all copies of it from your system, destroy any hard copies of it and notify the sender. You must not, directly or indirectly, use, disclose, distribute, print, or copy any part of this message if you are not the intended recipient. CREDIT SUISSE GROUP and each of its subsidiaries each reserve the right to monitor all e-mail communications through its networks. Any views expressed in this message are those of the individual sender, except where the message states otherwise and the sender is authorised to state them to be the views of any such entity. Unless otherwise stated, any pricing information given in this message is indicative only, is subject to change and does not constitute an offer to deal at any price quoted. Any reference to the terms of executed transactions should be treated as preliminary only and subject to our formal written confirmation. - IPW052101.doc
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