Central Puerto downgraded to Neutral on Argentina policy risk at JPMorgan. JPMorgan analyst Henrique Peretti downgraded Central Puerto to Neutral from Overweight without a price target. The analyst sees policy discontinuity risk following the "unfavorable" results in the Argentina primary elections this past Sunday. The primaries suggest a high likelihood of a government and policy change, Peretti tells investors in a research note. He beeves that electricity tariffs, which have been under scrutiny in Argentina after rising over 2,000% in the past four years, could be targeted by a new populist government.
Central Puerto downgraded to Underperform from Neutral at BofA/Merrill. BofA/Merrill analyst Frank McGann downgraded Central Puerto to Underperform from Neutral and lowered his price target for the shares to $7.50 from $20. A potential new government in Argentina would lower prices in the company's legacy generation business, McGann tells investors in a research note.
Central Puerto S.A. announced the purchase and expansion of the Brigadier Lopez plant from IEASA, a company owned by the argentine government, effective April 1, 2019. The plant currently operates with a gas turbine in an open cycle configuration and is currently in advance stages to add a steam turbine in a combined cycle configuration, which will add 140 MW. Once completed, the combined cycle will increase its efficiency significantly, becoming the most efficient combined cycle of Argentina in terms of heat rate, according to CAMMESA's estimations. The power capacity and the energy produced will be taken by CAMMESA under PPA agreements. The price offered for the transaction was $165M, from which $155M will be paid in cash, and $10M will be settled with the transfer of trade receivables owed to the company by CAMMESA, accrued in past under prior regulations. Central Puerto will also assume $161M in debt, to be paid in 41 monthly equal installments starting on April 2019 and accruing a 6 months-Libor +5% variable or 6.25% fixed interest rate, the highest. With this purchase, the consolidated installed capacity of Central Puerto as of April 1, 2019 will increase 7%, totaling 4,090 MW. Taking into account all its expansions plans, Central Puerto expects that its consolidated installed capacity will reach 4,889 MW, an increase of 28% compared to the company's current installed capacity.