nextera energy school of business investment...
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School of BusinessInvestment Program
NextEra Energy
3
Steven LangeNoah Nissen
School of BusinessInvestment Program
Investment Thesis
Company Overview and History
Corporate Governance
Company Landscape
SWOT Analysis
Ratio Analysis
Fundamental Assumptions
Portfolio Analytics
Sector Outlook
Recommendation
NextEra EnergyTable of Contents
School of BusinessInvestment Program
Macro Perspective:
- Upside potential in wholesale- Downside protection in regulation- Utilities thrive in late stage
Company:
- Hybrid Utility- Traditional & Wholesale energy generation- Leaders in renewable energy- Worlds largest utility company- Excellent corporate strategy- Growth through acquisition- Innovation
Investment ThesisNextEra Energy
3Footnotes
Date 10/08/2018
Current Price $173.32
Market Cap $82 Billion
Beta 0.44
Sector/Industry Utilities
Target Price $190.52
School of BusinessInvestment Program
- Nextera (NEE) is the world’s largest utility company and is headquartered in Juno Beach, Florida.
- Began in 1925 as Florida Power & Light Company.
- 1989 Deming Award Winners- In 2010, FPL Group changed its name to
NextEra Energy, reflecting the company’s commitment to the environment and its expansion outside of Florida.
Company Overview and HistoryNextEra Energy
4Footnotes
School of BusinessInvestment Program
James L. RoboChairman and Chief
Executive OfficerNextera Energy, Inc.
Corporate LeadershipNextEra Energy
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Eric SilagyPresident and Chief
Executive OfficerFlorida Light & Power
Company
Armando PimintelPresident and Chief
Executive OfficerNextera Energy Resources, LLC
John KetchumChief Financial OfficerNextera Energy, Inc.
School of BusinessInvestment Program
Corporate StructureNextEra Energy
6Footnotes
School of BusinessInvestment Program
- FPL obtains its operating revenues from the sale of electricity to its five million retail and commercial customers.
- Regulated rates are established by the FPSC through base rates and cost recovery clause mechanisms.
- FPL's allowed regulated return on equity= 10.55% with a range of 9.60% to 11.60%.
- Built in base rate revenue increases:
Florida Power and LightNextEra Energy
7Footnotes
2017 $400 million
2018 $200 million
2019 $200 million
School of BusinessInvestment Program
Nextera Energy ResourcesNextEra Energy
8Footnotes
- One of the largest wholesalers of electric power in the
U.S.
- Clean and renewable sources.
- Develops and builds battery storage projects.
○ Full energy and capacity services
○ Power and gas marketing and trading activities.
○ Invests in natural gas, natural gas liquids, oil
production and pipeline infrastructure assets.
School of BusinessInvestment Program
Strengths Weaknesses
- Acquisition- Cutting costs- Battery prices decrease- Spending $25B on renewables - Government Incentives
NextEra Energy
9Footnotes
Opportunities Threats
- Largest utility company in the world- Excellent operations and management- Hybrid energy company- Innovation- Cheap electricity- Regulation
- Regulation- Debt / Rising interest rates - Service Competition- Seasonality
SWOT
- Government contracts- Electric grid security- Natural Disasters- Commodity pricing
School of BusinessInvestment Program
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NextEra EnergyInnovation
Battery development- 100 MW of battery energy storage systems- Efficient lithium ion battery storage- Decreasing battery prices
Wind & Solar energy- 120 Wind facilities in North America -14000 MW- 200 MW clean energy under operation- 50 MW project on Florida coast approved- 7 million solar panel contract with JinkoSolar- $1.3B purchase from Energy Resources
-1338 MW
“By early in the next decade we expect that without incentives, solar will be $0.03 to $0.04 per kilowatt hour product, below the variable costs required to operate an existing coal or nuclear generating facility of $0.035 to $0.05 per kilowatt hour.” - Jim Robo
18MW Storage Meyersdale, PA
20MW Storage Lee Dekalb, IL
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HurricanesNextEra Energy
11Footnotes
Reinforcing infrastructure
- 450 lines underground
- Strengthening 850 critical lines
- 5 Million smart meters
Increasing response time
- 10,000 reps for Irma
Donating to relief funds
- Florida Disaster Relief Fund
- Red Cross
- Puerto Rico
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HurricanesNextEra Energy
12Footnotes
Paid for damage using Federal Tax Savings instead of increasing customer rates
Restored services to 99 percent of the 1.2 million customers affected within 2 days
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- Provide electricity in Mid-Atlantic & Mid-West
- Hybrid revenue stream - Economically failed
nuclear plants in Northeast
- Reliant on Government subsidies
- Reducing emphasis on renewable energy
NextEra Energy
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- Vertically integrated utility across Mid-Atlantic & Mid-West
- Largest customer base- Heavily invested in
traditional energy- Regulated revenue
focus- Coal, Gas, and Nuclear
focused
- Vertically integrated utility located in the Southeast
- 2nd largest utility in terms of customer base
- Invest primarily in traditional energy
- Coal, Gas, and Nuclear focused
- Cost of nuclear plant in Vogtle has doubled estimated $14B
Competitive Landscape
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% Change
NextEra Energy
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Ratio AnalysisNextEra Energy
15Footnotes
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Football FieldNextEra Energy
16Footnotes
School of BusinessInvestment Program
Dividend growthNextEra Energy
17Footnotes
10 Year Dividend Growth
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DCFNextEra Energy
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VaR
NextEra Energy
School of BusinessInvestment Program
Buy 41 Shares of NextEra Energy at 173.32
Approximately $7,106
Investment ProposalNextEra Energy
20Footnotes
School of BusinessInvestment Program
● Investment Thesis○ Largest Telecom company in the world in terms of customers (>60%
market share in China)○ Increasing moat against competitors with moves into 4G ○ China Mobile is nearly guaranteed to continue expanding with minimal
competition○ Global trend of moving from voice services towards mobile data (4G)○ Strong support from chinese government
Overall, one of the safest ways to invest in China’s long term growth
China MobileSell 142 Shares of CHL at $49.80
21Footnotes
Date 10/09/2018
Current Price $49.80
Purchase Price $49.65
Market Cap $204 Billion
Beta 0.75
Sector/Industry Telecommunications
Target Price $59.05
P/E 11.28
School of BusinessInvestment Program
Appendix
NextEra Energy
Footnotes
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NextEra EnergyAppendix
School of BusinessInvestment Program
NextEra EnergyAppendix
School of BusinessInvestment Program
School of BusinessInvestment Program
NextEra EnergySeasonality