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Enron Mail |
Good Afternoon,
Attached, please find the latest issue of our Independent Power Weekly. <<IPW050701a.doc<< <<Fuel Econ.xls<< Summary: 1. IPPs Fall 1.7% Last week our IPP composite traded off 1.7%, underperforming both the NASDAQ (+5.6%) and the S&P 500 (+1.1%). AES and International Power were the strongest performers, rising 2.2%. Orion Power was the weakest performer, falling 7.1%. 2. California Concerns Capture Center Stage The IPPs took a breather last week, following investor enthusiasm surrounding strong first quarter earnings results. Dampening stock price performance, a number of concerns related to the California power crisis captured center stage and dominated investor attention. 3. Looking Ahead For the week ahead, while we are not expecting any major company specific events, we could continue to see a heavy news-flow out of California In particular, we'll be looking for additional news regarding SB 1X-the windfall profits tax bill. This week it will be considered on the floor of the California Senate. Also, on Wednesday (5/9), Governor Davis will meet with a number of generators to discuss the ongoing power crisis. While 12 generators have been invited to attend the meeting, it is unclear if all will accept the invitation. 4. Mirant Hosting Analyst Meeting on 5/14 and 5/15 MIR will host its first major analyst seminar on May 14 and 15 in Atlanta. We believe MIR represents one of the best values in the group. The stock is currently trading at 20.6 times our 2001 EPS estimate, representing a 24% discount to the group average. Since the beginning of the year, earnings expectations for Mirant have increased by 58%. We believe MIR's relative valuation discount reflects investor confusion surrounding the drivers of the recent upside as well as skepticism surrounding the sustainability of earnings growth over the next few years. We believe management will address these issues at the analyst meeting, which should help close some of the valuation gap between MIR and its peers. 5. Prospects for New Coal and Nuclear-fired Capacity CSFB's monthly merchant conference call took place on Thursday (5/3). The topic was "The Future of Generation: Coal and Nuclear." Overall, our guest speakers concluded that the current environment is ripe for the development of new coal and nuclear fired power plants. Our analysis indicates that it is economically attractive for developers to begin pursuing coal and nuclear-fired power projects. Having said that, given physical construction and permitting constraints, it could be some time before these fuels become a major factor on the new plant construction landscape. Attached, please find a spreadsheet highlighting the relative cost economics of natural gas, coal and nuclear power plants. This analysis takes into account current construction costs and a required return of 12%. 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. - IPW050701a.doc - Fuel Econ.xls
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