Tag Archives: latin-america

High-Yield Utility That Has Fallen Off Everyone’s Radar

Summary Brookfield Renewable Energy yields 6.6%, over 1.6% higher than the typical utility that yields under 5%. The company is riding on the mega-trend train of a global growing demand in renewable energy, and the business has the expertise to bank on acquisition opportunities. The business forecasts dividend growth of 5-9% per year through 2020 and a long-term shareholder return of 12-15%. I’m primarily a dividend growth investor. So, current income and growth of that income is important to me. Utilities are typically known for their high yields. So, buying utilities, I expect a good part of returns to come from their dividends. The lower the price goes, the higher the yield climbs. That’s the case with Brookfield Renewable Energy Partners LP (NYSE: BEP ), as it has fallen over 18% from a year ago. (click to enlarge) Compared to most other popular utilities, Brookfield Renewable has performed quite poorly price-wise in the past year. Particularly, I’ve put it in a chart with Consolidated Edison, Inc. (NYSE: ED ), Duke Energy Corp (NYSE: DUK ), WEC Energy Group Inc (NYSE: WEC ), and Southern Co (NYSE: SO ). Source: Google Finance The utility group typically yields in the 4-5% range, and Brookfield Renewable stands out by yielding 6.6%. But, perhaps, that’s because it is viewed as higher risk with an S&P credit rating of BBB, while the others all have a rating of A-. BEP Dividend Yield (TTM) data by YCharts To consider it as a potential utility holding, the question you want answered is probably: “Is Brookfield Renewable Energy’s distribution sustainable?” First, let’s find out if it’s the kind of business you want to own. Business and Assets Brookfield Renewable has started investing in hydropower facilities 20 years ago. Today, it has become one of the biggest public pure-play renewable businesses with global assets. It focuses on accumulating long-life and low-cost assets that will continue generating cash flows. Since it requires deep operational knowledge and marketing expertise to enter the space, there’re significant barriers to entry. Brookfield Renewable has $19B worth of power assets, including around 250 power generating facilities across 14 markets in 7 countries. 81% of its 7,300 MW capacity is generated by hydroelectric facilities with about 18% generated by wind power. Currently, 50% of its assets are in the U.S., 25% are in Canada, 20% are in Brazil, and 5% are in Europe. Not Just an Income Play, But Also a Growth Play Demand for renewable energy has been growing. New investments in renewables around the globe have grown from $45B in 2004 to $270B in 2014, a CAGR of 19.6%. More recently, from 2013 to 2014, they grew at a rate of 16.4%, which is still admirable growth. Specifically, hydro power capacity grew at a CAGR of 4% over the decade, and 3.6% from 2013 to 2014. Although its growth only keeps pace with inflation, hydro power generation is low cost, and is more reliable than wind power generation. On the other hand, wind power capacity grew at a CAGR of 22.7%, and 16% from 2013 to 2014. In the last four years, Brookfield Renewable acquired and developed about 3000 MW, which is a CAGR of about 14%. How Does Brookfield Renewable Grow? Over the next 5 years, Brookfield Renewable plans to deploy over $3 billion of equity, expecting 15% returns. The focus will continue to be on hydro power generation, and acquiring global renewable assets at attractive prices. For example, in 2004, Brookfield Renewable acquired a 600MW capacity pumped storage asset with its 50% joint partner during a period of low power prices for $99M. It then entered into a 15-year contract that creates a predictable cash flow stream. At the same time, it’s not shy from selling for good profit as well. For example, in 2009, Brookfield Renewable acquired an early-stage wind power development project for $90 million. It finished constructing it and optimized operations by leveraging its wind expertise to maximize value. In July 2015, it sold the asset by attracting global bidders and generated an internal rate of return of about 30%. Like it did in North America and Brazil starting in 2011, Brookfield Renewable can continue its value creation process and repeat it in Europe, Latin America, and other new markets. A Safely Growing Dividend As Brookfield Renewable grows, it doesn’t forget to reward shareholders. From the distribution that commenced in 2011, it has grown from a quarterly distribution of 33.75 cents per share to 41.5 cents per share this year, a CAGR of 5.3%. About 90% of Brookfield Renewable’s cash flows have a 17-year average contract term with inflation-linked escalation, so its cash flows remain stable to support its distributions. Further, it targets an FFO payout ratio of 70%. With FFO expected to increase by $220-$280M a year, Brookfield Renewable forecasts distribution growth of 5-9% per year through 2020. Valuation Brookfield Renewable believes it’s intrinsically worth $34 a share even when excluding potential for rising prices, and existing project pipelines. At $25, it is discounted by over 26%. Adding in organic growth, the business believes it’s easily worth over $40 in the future, implying a significant discount of over 37%. (click to enlarge) Source: Brookfield Renewable October Investor Meeting – Slide 35 What Should Be Your Returns Expectation? Other than forecasting distribution growth of 5-9% per year through 2020, the business’s objective is to deliver long-term total returns of 12-15% to shareholders annually. With a current yield of 6.6% and the distribution estimated to grow at least 5%, that implies a rate of return of at least 11.6%, which is close to the low-end of that objective. Conclusion I just added to my position in Brookfield Renewable last week. How about you? Did you buy any utilities recently? Share in the comments below! If you like what you’ve just read, follow me! Simply click on the “Follow” link at the top of the page to receive an email notification when I publish a new article. Resources and References Brookfield Renewable October Investor Meeting ( pdf ) Brookfield Renewable November Presentation ( pdf ) Ren21 Renewables 2015 Report ( pdf )

VEA: Who Doesn’t Like Developed Markets With Low Expense Ratios?

Summary This fund serves a viable core holding for the international portion of an equity portfolio. Investors can customize their position by adding other small allocations. Investors need to remember the importance of international diversification even as domestic equity as thoroughly outperformed during the latest bull market. The ETF has an very reasonable expense ratio. The Vanguard FTSE Developed Markets ETF (NYSEARCA: VEA ) is a great ETF for getting exposure across the world. I love covering Vanguard ETFs because the low expense ratios and reasonable allocations regularly give me reason to be excited about an ETF being designed to benefit the investors. This is no exception, the ETF sports an expense ratio of.09%. Vanguard regularly sets the bar for creating low fee investment vehicles for investors to gain solid diversification with low costs. Holdings I grabbed the following chart to demonstrate the weight of the top 10 holdings: These sector allocations are fairly common for large international equity ETFs with a fairly passive management style and low expense ratio. In my coverage of international ETFs, I regularly see most of these companies in the top 10. If you wonder what that means for investing, it means the funds with lower expense ratios have a very material advantage. It’s hard enough to beat a lower fee fund when the sector allocations are similar, when the underlying companies are the same it becomes an absurd task. That makes the .09% expense ratio a pretty big winner for VEA. Sectors (click to enlarge) The sector allocations here are pretty similar to the benchmark and pretty similar to peers. Since the top companies are fairly similar across major international ETFs, it shouldn’t be a huge surprise that the sector weights will also be fairly similar. In a domestic fund I would consider this to be a fairly aggressive allocation. When it comes to international equity, this reflects what is available in the market. I would love to see international investing shift to include more of the defensive sectors to reduce the volatility that can plague international investments, but for now the best strategy available to shareholders is to simply utilize international investing as a way to gain further diversification for an intelligently designed domestic portfolio. Attempting to use VEA as the entire portfolio would expose investors to a substantial amount of diversifiable risk. However, using the fund within the context of a portfolio allows it to enhance diversification and create a lower level of total risk rather than a higher level. Region Japan and the United Kingdom both got huge weightings here. If there is one critique for this otherwise stellar ETF it would be that the exposure might be weighted to create a slightly lower allocation towards individual countries. I’ve got nothing against investing in Japan or in the United Kingdom, but I would like to see heavier weights for the lower countries on the list. If investors want to create the optimal international allocations, I think VEA is a perfectly reasonable place to start. I would want to add some customized exposure to the emerging markets and possibly enhance the weight of countries that are a smaller portion of the fund. I’ve been a bear on China for quite a while, but many of my bearish assumptions have been priced into the Chinese equities now so I wouldn’t be too opposed to having a small allocation there. I’d love to add some exposure to Latin America as well. Russia is another market that is still excluded from the developed markets ETF. I would want to give the emerging markets positions a much lower weighting than the developed markets position, but I wouldn’t mind a small position in those markets. Conclusion I see plenty to like in this Vanguard fund and very little to dislike. For my personal tastes, I would want to add a little bit of emerging market exposure, but a huge developed market ETF with a low expense ratio gives investors a way to grab their main international exposure so that other positions can be customized to fit in any other small allocations the investor would like. Think of this fund as an option for the core of the international piece of the portfolio. For some investors this will be enough by itself, for others it will make sense to compliment it with a few other holdings.

Enersis’ (ENI) Q3 2015 Results – Earnings Call Transcript

Enersis S.A. (NYSE: ENI ) Q3 2015 Earnings Conference Call November 03, 2015 10:00 AM ET Executives Javier Galan – Chief Financial Officer Analysts Cosma Panzacchi – Bernstein Research Javier Suarez – Mediobanca Antra Murra – Santander Nicolas Schild – Santander Carmen Concha – Moneda Ezequiel Fernandez – Scotiabank Operator Good day, ladies and gentlemen, and welcome to the nine month results 2015 Enersis Earnings Conference Call. My name is Sonia, and I will be your operator for today. During this conference call, we may make statements that constitute forward-looking statements within the meaning of the private securities litigation reform act of 1995. These statements could include statements regarding the intent, belief, or current expectations of Enersis and its management with respect to, among other things, Enersis’ business plans, Enersis’ cost reduction plans, trends affecting Enersis’ financial condition, or result of operations, including market trends, electricity sector in Chile or elsewhere, supervision and regulation of the electricity sector in Chile or elsewhere, and the future effects of any changes in the laws and regulations applicable to Enersis or its affiliations. Such forward-looking statements reflect only our current expectations and not guarantees of future performance, and involve risks and uncertainties. Actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. These factors include a decline in the equity and capital markets of the United States or Chile, an increase in the market rate of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in Enersis’ Annual Report on Form 20-F included under Risk Factors. You may access our 20-F on the SEC’s website, www.sec.gov. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their date. Enersis undertakes no obligation to update these forward-looking statements or to disclose any deployment as a result of which these forward-looking statements become inaccurate. I would now like to turn our presentation over to Javier Galan, Enersis’ CFO. Please proceed. Javier Galan Good morning, and welcome to our nine months conference call results presentation. I am Javier Galan, CFO of the Company, and with me today is Pedro Canamero, our Investors Relation Director. Please, let me remind you that the presentation will follow the slides that have been already uploaded in our website. Also, as always, we will have the usual question-and-answer session at the end of this presentation. First, on slide number two, I will start by outlining the main updates of the period. During the first nine months of the year, EBITDA recorded $2.6 billion, increasing by 8% compared with the same period of last year. This was mainly due to the positive performance during the third quarter in generation business in Chile and the positive results in distribution business in Argentina due to resolution number 32. This was partially offset by a negative exchange rate effect in Brazil and Colombia. Net income attributable to Enersis shareholders increased by 49%, reaching $653 million due to an adequate operational performance and better financial results compared to the same period of last year. As a result of this, earnings per share for the first nine months of the year was CLP8.3 per share compared to CLP5.5 last year. In October 6, our Colombian generation subsidiary, Emquesa, announced the initial generation tests for the 400 megawatt new hydro plant, El Quimbo. It is expected to enter into a commercial mode for mid-November. Let me just remind you that the energy production of this investment on a yearly basis should be approximately 2.2 terawatt hours, with an implied load factor of 63%. Finally, I would like to highlight the outlook improvement in Chile due to range rated El Nino phenomenon. During September, our hydro capacity increased by 17% versus the previous month. Year-to-date, the total hydro capacity of our plant in Chile grew by 20%. Let me now focus your attention on the macro scenario for this year in slide number three. Despite the global macro trends related to commodities, US dollar interest rate expectations and currencies, GDP growth of the countries where we operate, with the exception of Brazil, continue to increase at more than 2% annually. This is reflected in our electricity demand growth evolution of the first nine months of the year compared with 2014. On this respect] let me highlight the resilience of countries like Colombia and Peru, which shows a demand growth that continued to stay at the same level, or even higher compared with last year. This compensate the lower activity in Chile and Brazil being Ampla, our distribution company in Rio de Janeiro, the most effective company due to its exposure to a lower demand growth and higher electricity losses. Regarding spot prices in Chile, we’re down 44.2% compared with the same period of last year, mainly due to a rainier season that continued to show a similar trend in October. However, in Chile, we have not achieved an average hydro year yet. Let’s now take a look to our main operational highlights under the scenario on slide number four. The installed capacity of Enersis Group increased by 3.6%, or 555 megawatt due to El Quimbo hydro plant in Colombia for 400 megawatts, the restart of the gas plant TG7 in Peru for 157 megawatts, and the last unit of the Salaco Chain hydro plant for 18 million megawatts in Colombia. Net production of the Group remained flat in the first nine months of the year. Here, the lower hydro production in Brazil was partially compensated by higher thermal generation in Chile. Finally, distributed electricity increased by 2% due to higher energy sense in all the countries where we operate. On this respect, the most important areas of growth were Peru and Argentina, which increased by 4%. The number of clients at the end of September amounted to 15.1 million clients, 449,000 clients higher compared to the same period of 2014. In slide number five, let me explain the main regulatory items for the period. In Colombia, as you know, the worst tax for the full year recorded in January impacted EBITDA by $23 million. This tax will last until 2017. And regarding the new regulatory cycle, we are expecting to have the final work definition during the fourth quarter of 2015. In Peru, since September 24 and following decree law number 1,221, the recent modification to the distribution tariff calculation for the next regulatory period 2017-2021 regarding from a sector model base to a real value-added distribution base on each company. We do not expect changes in the final tariff as the current model company is very similar to us in terms of efficiencies. In Brazil, the distribution company Ampla sent a request to ANEEL asking for an extraordinary tariff review recognition based on the CVAs already accumulated during the year, an increase of uncollectables recognized in the tariff, and an improvement of the regulatory index related with [indiscernible] losses. Now, on slide six, we will analyze the financial highlights for the period. Revenues increased by 9%, and EBITDA by 8%. This is mainly explained by the 4.1 recovery of the EBITDA in the generation business, which produced $669 million in the last quarter, together with the stable distribution business, which recorded $388 million in the same period. The overall company EBITDA during the third quarter was almost $1 billion. Net income attributable to Enersis shareholders increased by 49%, recording $653 million in the first nine months of the year due to the combination of better operational results, the positive effect of additional minorities interest acquired during 2013 in [indiscernible], and GasAtacama, and a better financial result, which improved by 54% during the period, which will be explained later on. Net debt increased by $240 million mainly due to higher investments. Let me analyze the EBITDA and the net income evolution in more detail in the following slides. On a country-by-country basis, and comparing with the same period of last year, overall EBITDA increased by $181 million, or 8% despite the negative impact of translation effect rate in Brazil and Colombia. In Chile, EBITDA increased by 36%, amounting to $678 million in the first nine months of the year. During the third quarter of 2015, Chile EBITDA reached $344 million, increasing more than 30% compared to last year. This was possible due to our lower spot market prices related to a better hydrology in the country, (inaudible) generation, and the effective thermo plant energy management, which more than compensate the perimeter effect of non-corrective we saw last year in particular in Milan and Enel. In Brazil, EBITDA decreased by 22%, or $132 million as of September this year, mainly related to the exchange rate impact of 17.5%. The remaining negative impact of 4.7% is related to higher energy purchase costs, inflation, and fixed costs in Ampla. This was partially offset by the good results in Coelce, which is on the fourth regulatory cycle with an increasing demand growing at the rate of 2.4%. In Colombia, the business was also impacted by a negative exchange rate effect of 16%. Net of this effect, results were flat compared to last year. Let me remind you that this year’s results contain a wealth tax of $23 million recorded at EBITDA level during the first quarter of 2015. In Peru, the business continues to grow at a solid rate mainly due to the good performance of the distribution business showing a 15% increase in EBITDA in the first nine months of the year, reaching $166 million. This is the result of higher accumulated electricity demand, which grew at the range of 4.7%. Finally, in Argentina, the EBITDA increased by $257 million during the period, mainly due to the distribution business as a result of the already-mentioned resolution number 23. On next slide, you will find a brief overview of the EBITDA breakdown by country and by business. Colombia remains as the main EBITDA contributor, generating one-third of the accumulated EBITDA in the first nine months of the year. Together with Peru, these two countries amount for $1.3 billion of EBITDA, or 49% of the total figure, amounting $2.6 billion. Chile also increased its EBITDA contribution since last year, moving from 21% to 26% as explained in the previous slides. In terms of business activity, generation represents 58% of the consolidated EBITDA, 2% higher than last year. Let’s now have a look at the main factors determining the Group net income on slide number nine. In addition to EBITDA and EBIT growing 8% and 10% respectively during the first nine months of the year, we have had a relevant positive impact of financial results, which decreased by 54% or $260 million compared to the same period of last year, recording $223 million. This was mainly due to the following factors. On the one hand, a higher financial income of $180 million related to 2015 IFRIC 12 remuneration and CPA indexation in our Brazilian assets. Secondly, in the other hand, lower financial expenses for $105 million in part related to the exchange rate effect on lower debt in Argentina. Finally, the effective tax rate during the period was 38.5% if compared to the 41% registered in the same period of 2014. As a result of all this, total Enersis net income increased by about 32%, reaching almost $1.1 billion and net income attributable to Enersis shareholders, which determined the earning per shares and the dividend, increased by 49% to $623 million. Let me now focus your attention on the capital expenditure structure on slide number 10. During the first nine months of the year, growth investments increased 36% compared with last year, mainly due to El Quimbo, which explains 47% of this variation. Overall, net investments amounted to $1.2 billion, increasing 5% if compared to last year. 55% of this CapEx was destinated to generation activities, and 45% to distribution activities. With all these elements, let’s analyze the cash flow on the net debt evolution during the first nine months of the year in the following slides. During the first nine months of the year, funds from operations amounted to $1.6 billion after tax payments and financial expenses. This amount covered both maintaining and growth CapEx. Re-concentration of dividends distributed during the first half of the year to Enersis shareholders, including minorities, for a total amount of $110 million was the main factor explaining the negative cash flow that equaled to $674 million. We expect an actual recovery of this trend during the final part of the year. Now taking into account this free cash flow evolution, let me explain you the net debt evolution in next slides. During the first nine months of the year, net debt increased by $240 million from $3.1 billion to $3.3 billion, mainly due to the cash flow evolution already mentioned and the positive impact of our debt mainly denominated in local currency following the natural debt allocation, which tends to be in the same currency of the flows of the Company — that the Company receives. Finally, let me give you an overview of the gross debt and maturity profiles in slide number 13. As of September 2015, gross debt amounted $5 billion, 18% lower compared to December 2014 as a result of the exchange rate effects and some loans repayments. The average cost of debt remains stable at 8.4%. Total liquidity amounted to $2.9 billion, allowing us to easily service our debt through 2017. This liquidity position includes committed and uncommitted credit lines for $1.2 billion and cash and cash equivalents of $1.6 billion, of which $1.2 billion are related to capital increase. Our short-term maturities are $180 million for 2015, and $849 million for 2016. Thank you very much, and now let me hand over to the operator for the Q&A session. Please, Operator? Question-and-Answer Session Operator [Operator Instructions] Our first question comes from Cosma Panzacchi of Bernstein. Your line is now open. Cosma Panzacchi Hi, thank you for taking my call and my questions. I have three brief questions. The first one is industrial. So, I’ve seen that there has been a general increase in losses in your distribution business across several countries. Could you actually explain what is driving this trend, and what plan do you have in place to actually optimize the losses again? The second question regards the impact of El Nino, especially given your exposure to Colombia. I wonder if this will create a potential headwind, going forward, or not. And then, the third question regards guidance. If I remember correctly from the H1 call, you were positive about your possibility of achieving the end of year targets or guidance, if you want. Do you still maintain that optimistic approach, or that positive approach? And looking forward to 2016, if I remember correctly from also the numbers that Enel has shown in the past, Enersis is expected to grow the EBITDA by approximately 20% in the generation business. Do you still think that that’s achievable, given the evolution of the macro? Thank you for taking my questions. Javier Galan Thank you very much for your question. I’ll try to address on the same order that you did them. On the industrial side, yes, we have had a general increase in losses in different distribution companies. I would say the DB Ampla, the one that is being more affected during [indiscernible] due to a higher distribution — costs on distribution, and higher losses due to theft in specific areas in Brazil, and related also to the current scenario on the country. In the second question you made related to El Nino exposure, I may say that currently in Colombia, we are expecting this situation to remain mainly at the half of next year. And currently, we are in a very good, sound position on the reserves, or both El Guavio and Betania, with 19% and 17% approximately of capacity higher than the system capacity, and along with higher prices on the region, we think we are well set up on what position in this scenario. And the third question, as you know, we do not give guidance. We have had a very good third quarter, as you saw, with $1 billion generation of EBITDA, and we are optimistic on the fourth quarter relating to specifically Chile potential generation capacity. Operator Our next question comes from Javier Suarez of Mediobanca. Your line is open. Javier Suarez Hi, good afternoon, Javier, Javier Suarez of Mediobanca. Thank you for taking my questions. I have three of them. The first one is on the debt structure of the Company. In the slide number 12, you are reporting an increase in the net debt from $3.1 billion to $3.3 billion. In terms of financial in hard currencies there, so local currency, can you break down for us by the different countries which is the [indiscernible] of your financing that is in local currencies versus hard currencies, I guess, in US dollar terms? That is the first question. The second question is on your EBITDA. Can you give us an idea on the percentage of your EBITDA on which the revenues stream is effectively in US dollar, i.e. in hard currency? I’m trying to make up my mind in the matching between your revenues stream and then the service of the debt. And the third question that I have is can you guide us through why the Company is suffering a decrease on the financial expenses when the Company has [indiscernible] on increasing the net debt position by 8%, and also the average cost of debt is also slightly increasing? Many thanks. Javier Galan Okay. Related to the debt structure shown on slide number 12, I will say that, related to the structure of this debt, we finance basically the distribution businesses and companies with local currency due to the fact that we do not have any indexation to dollars or — to dollars. And in the generation, we are basically — in generation in Chile and generation in Peru, we are financed in dollar terms due to the correlation on the dollar, on the way the tariff is determined. And the others are mainly on local currency. In terms of EBITDA, as I said before, we have revenues mainly in generation in Chile and Peru related to US dollars, so that’s the amount you should try to make up in terms of how much are we saving or how much are we indexed to dollars in this regard. In reference to your last question about the financial expenses, I made an explanation of why we had this reduction of financial expenses. That is mainly due, as I said before, so compensation on IFRIC 12, both on distribution businesses in Ampla and Coelce, which will have this year a positive effect, and last year we had a negative effect. So, we are (inaudible) is a relevant amount. Also, we have some cancellation of financial expenses in Argentina related to CAMMESA debt. And yes, we have had a slight increase in costs in financial expenses, both in Colombia and Brazil, not relevant at this moment. And we also had less income related to — as we have had less cash due to the fact of the investments we made in the first half of the year, the cash related to the capital increase. So, that is the general effect on our financial expenses. Javier Suarez So, to be 100% clear, none of your distribution activities in Latin America are financed in hard currencies, and only the generation in Brazil and Peru are financed in US dollar terms, correct? Javier Galan Yes, distribution companies, that’s right. In generation, it’s Chile and Peru are financed in dollars. Javier Suarez Chile and Peru, okay. Many thanks. Operator Our next question comes from Antra Murra of Santander. Your line is open. Antra Murra Javier, thanks for taking my question. My question is about the tariff provision in Codensa. When it’s supposed to be — what’s your BOO this revision? Javier Galan See, we expect the revision to take place in the last part of the fourth quarter of this year. And as you know, there will be a reduction on the WAC. Today we have our WAC currently in 13.9%. We expect a reduction of 1%, 1.5% reduction, which is still — will be a very important remuneration for our asset base. Antra Murra Thanks. That’s it. Operator Our next question comes from Nicolas Schild of Santander. Your line is open. Nicolas Schild Hi, thank you for taking my question. You have said in the past that one of the reason for restructuring all the LatAm assets is the holding discount that is really high on Enersis, and is lower in the case of Endesa. So, that would imply, at least in my opinion, that one megawatt, for example, [indiscernible] of Enersis should be values, or should have a less — a lower value than one megawatts in the hands of Endesa. Do you think that the valuations are going to consider this when you do the transaction to calculate the terms of exchange? Javier Galan Thanks for your question. No, I think that it’s not now the moment about commenting on different valuations which are being done in the different companies which are looking at this potential reorganization. Nicolas Schild Okay, thank you. And my second question is regarding the future growth in Chile, because in July there was a — you sent a press release disclosing that you’re going to have three terawatts of product in the pipeline of Chile, of which more than two terawatt would be constructed in the next five years. However, today there is an interview to the industry and analysis in newspaper where he said that the growth is going to be on Chilectra, because the generation opportunities — or they would do it in the generation business [indiscernible] time. When do you plan to clarify this? It’s going to be before having the shareholders meeting, or where do you see the growth in the future for this company, in both business in Chile? Javier Galan Thank you for your question. I think we have a very flexible and different optionalities in our pipeline, and we still have a very wide optionality portfolio of doing and growing in Chile. And we will develop this potential pipeline depending on the demand and depending on the prices on the country. And now, I’m trying to achieve a reasonable return for our shareholders. Regarding what you said about distribution and generation, I think that this company is in distribution business, such as the one which is in Chile. I think it’s very evolved business with a very high standard of consumption. I think that what Mr. Daniel Fernandez was trying to say is that there’s an opportunity to grow in giving more value to clients in Chile, and he was not talking more about the investment plan. Nicolas Schild All right, thank you. And my last question is regarding Ampla. Can you remind us what would be the regulatory EBITDA of that operation, and why is there the big difference between them [indiscernible], or also you are, for example, increasing expenses to lower that safe, or if you can do — if you give us a breakdown or where you’re losing that difference? Unidentified Company Representative Nicholas, about the regulatory, let’s say, review of Ampla, it’s still to be seen, which is going to be the final quantity that the DML is going to be recognized. And as we said in slide number five on October 29, on October 29 we asked for this RTP that should come in the next month. So, we have to see which of these three points has been commented are going to be taken to [indiscernible] by the regulator in order to anticipate this kind of [indiscernible] to Ampla. Nicolas Schild Okay, thank you. Operator Our next question comes from Carmen Concha of Moneda. Your line is open. Carmen Concha Hi, good afternoon. Which are the companies paying management fees in Peru and in Brazil? Can you tell us a little about the services that are provided by Enel related to these charges? Javier Galan Could you repeat your question? Carmen Concha We saw that the companies paying management fees in Brazil and Peru, so we would like to know a little about the services that Enel is providing related to these charges. Javier Galan I would say that there are two companies in Brazil, and Peru have signed a general service contract agreement with Enel. This general service is a framework contract which provides potential technical services or procurement, or other support activities being provided on markets like this by Enel on a customary basis on a one-by-one — on a specific basis, no? I think that the idea is to generate this framework contract in order to be able to take advantage of this type of potential services. So far, services have not been yet paid, and they are [indiscernible] contracted on a standalone by each of the companies on this framework contract. Carmen Concha Well, in the case of Peru? Javier Galan Both cases, in Peru and in Brazil. Carmen Concha So, the management fee is paid only when the services are provided, not now? Javier Galan Yes. Carmen Concha Okay, thank you. Operator [Operator Instructions] Our next question comes from Ezequiel Fernandez of F-O-T-I-A. Ezequiel Fernandez Yes, hi, guys, thank you for taking my question. I have three questions. I’d like to go one-by-one, and sorry if I repeat myself, because I got disconnected from the call. First is regarding the CapEx levels at Codensa and Edelnor, which went up materially for historical standards during this year. Any particular project or reason behind this? Should we expect lower CapEx in both operations maybe in the next one or two years? Javier Galan Okay. I think no, we are not expecting a reduction on the CapEx in Codensa or Edelnor. We are basically investing in quality, and in higher quality connections. And we aren’t expecting lower CapEx. Ezequiel Fernandez Okay, great. And my second question is also related to Ampla. If DNL does not grant an anticipated tariff update like you recently requested, would you need to do a capital injection from Endesa Brazil into Ampla maybe in upcoming months, or do you think it’s not that serious yet? Javier Galan We are studying the situation of Ampla. And as you mentioned, we have asked this tariff review. We are expecting to know from the ANEEL when are we going to have some feedback. I think that the situation of the Company is we need to monitor the situation, and we are studying different opportunities together with the financial community right now. Ezequiel Fernandez Okay, great. And I want to ask you a question about — finally about Edelnor, the Lima distribution unit. The results have been previewed lately, and I’m not very knowledgeable about how exactly the tariff update mechanism takes place. But, I do remember something. It seems that Edelnor tariff might have a higher pass-through to the US dollar than the regular — I mean, the rest of the distribution units. Would you agree with that, or maybe that the results are — especially in profitability, on profit per megawatt hour are related to other stuff? Thank you. Javier Galan No. In Edelnor, there’s no indexation to US dollars, if that was your question. (Inaudible) that there is a new system, and instead of being a system related to a standard company’s going to be on a company basis. No, our comment was that the standard has been used. As of today is very similar to the one we currently have, so we do not expect changes on this regard. Ezequiel Fernandez Okay. Anyway, I was speaking about the profitability increase that we have seen in the last two years in Edelnor, but maybe I can take that question with Pedro and his team after the call. So, thanks a lot, very clear. Operator And I am showing no further questions at this time. I would like to turn the call back to Management for any further remarks. Javier Galan Thanks. Well, seeing as there are no more questions, I would like to thank you for your time and your attention. Remember that our Investor Relations team will be glad to assist you in any further questions you may have. Have a nice day. Thank you. Good bye. Operator Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.