SRE 3Q2017: New Strategy Takes Shape with Oncor; New Projects Increase NIV

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Auvila_SRE_Note_2017_3Q_Earnings_2017_10_30

Excerpt:

Market Price (10/30/2017): $117.45; ST-Target: $165/share; NIV: $230/share

  • We look for SRE to increase acquisition and investments activities in TX/Gulf-Coast areas. Other than generation, R&M nothing seems prohibited, especially if it has Mexico component
  • Guiding towards upperend of $5-$5.30/share 2017 AEPS guidance
  • 2020 AEPS guidance of $7.20-$7.80 seems low – only some 12% CAGR from 2016A AEPS. SRE is expected to grow dividends 8%-9% to match
  • 2018 GRC filed 10/2017 w/FD expected late-2018/early-2019
  • We look for outperformance with regards to SRE’s guidance in ST, MT and LT
  • Within next 12-months we look for Cameron 4&5 to get FID and begin construction
  • NIV/share moves up to $230/share from $210/share on 2017 performance and additions of new capital projects

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