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AES Idiosyncrati
Electrop.
1
1
3
0
2
3
3
2.2

Weight
3.5%
7.0%
10.5%
14.5%
18.0%
21.5%
25.0%
100.0%

Andres
3
3
3
3
3
3
3
3.0

Caracoles
2
0
2
3
1
2
2
1.8

Drax
2
2
2
0
3
0
2
1.5

15.0%

15.0%

9.1%

7.3%

10.9%

0.25
65%
0.39

0.50
59%
0.84

###
71%
0.71

0.25
70%
0.36

7.2%
8.9%
16.1%

10.4%
16.3%
26.7%

9.5%
0.0%
9.5%

7.0%
8.9%
15.9%

Default spread
Adjusted Rd
Marginal tax rate

3.6%
17.0%
25%

3.6%
24.3%
35%

3.6%
8.1%
0%

2.9%
16.3%
34%

WACC
+ Idiosyncratic
Adjusted WACC

14.9%
15.0%
29.9%

22.2%
9.1%
31.4%

9.1%
7.3%
16.4%

14.4%
10.9%
25.3%

Basis:
u
Equity %
l
Rf
Rm - Rf
Re
Sovereign spread
Adjusted Re

4.5%
7.0%

AES Idiosyncratic Risk Scores and WACC

Gener
Haripur
Kelvin
Lal Pir
0
0
0
1
1
1
2
1
1
0
1
2
0
2
1
0
2
1
0
1
1
0
2
2
0
1
1
2
0.7
0.8
1.1
1.4

Los Mina
3
3
3
0
3
3
3
2.6

OPGC
1
3
3
0
0
2
2
1.5

Ottana
0
3
0
0
0
1
0
0.4

Red Oak
2
3
0
0
2
0
0
0.6

3.8%

4.0%

5.4%

7.1%

12.8%

7.5%

2.1%

3.2%

0.25
65%
0.39

0.25
67%
0.37

###
67%
0.37

0.25
65%
0.39

0.25
71%
0.35

###
70%
0.36

0.50
58%
0.87

0.25
61%
0.41

7.2%
1.7%
8.9%

7.1%
5.2%
12.4%

7.1%
3.1%
10.2%

7.2%
9.9%
17.1%

7.0%
8.9%
15.9%

7.0%
3.6%
10.6%

10.6%
0.1%
10.7%

7.4%
0.0%
7.4%

4.3%
10.6%
17%

4.3%
14.1%
0%

4.3%
12.0%
25%

3.6%
18.0%
23%

1.9%
15.3%
25%

3.6%
11.7%
8%

4.3%
9.0%
35%

3.6%
8.1%
38%

8.9%
3.8%
12.6%

12.9%
4.0%
16.9%

9.8%
5.4%
15.2%

16.0%
7.1%
23.1%

14.6%
12.8%
27.4%

10.7%
7.5%
18.1%

8.6%
2.1%
10.8%

6.5%
3.2%
9.7%

Rivno.
0
1
1
0
0
2
0
0.6

Telasi
2
3
3
0
3
3
3
2.5

Uruguaiana
0
2
3
0
2
3
3
2.2

3.0%

12.7%

11.1%

0.25
64%
0.39

0.25
74%
0.34

0.25
68%
0.37

7.3%
10.0%
17.2%

6.9%
10.0%
16.8%

7.1%
8.9%
16.0%

3.6%
18.1%
30%

1.9%
16.3%
20%

1.9%
15.3%
34%

15.6%
3.0%
18.6%

15.9%
12.7%
28.5%

14.1%
11.1%
25.2%

Lal
Free Cas

EBIT
+ Depr.
- Cap. Ex.
- WC Inc.
Oper. CF
- Taxes
Free CF
Total EV
Value of the debt
Equity Value

1
2004
69.4
30.6
12.5
87.5
16.0
71.5

2
2005
69.1
31.3
###
###
87.9
15.9
72.0

3
2006
68.8
31.9
12.6
88.1
15.8
72.3

4
2007
68.5
32.5
12.6
88.4
15.8
72.6

5
2008
68.3
33.1
12.7
88.7
15.7
73.0

6
2009
68.0
33.8
12.7
89.1
15.6
73.5

285.65
430.7
(145.05)

Equity Ca

Equity CF
Equity Value(PV of CF)

1
2004
20.3

2
2005
20.4

3
2006
20.4

4
2007
20.4

5
2008
20.3

6
2009
20.2

134.2
There is a difference in the Equity Values which are derived from the two method
cash flows and discount them by the expected cost of equity hence, we take into a
method, we use WACC to discount the firm cash flows. Since WACC is a only a w
WACC incorporates many more assumptions and generalizations in the form of Id
identify the market risk accurately. All these new assumptions and varirables wou

Lal Pir Cash Flows

Free Cash Flow Calculations
7
8
9
10
2010
2011
2012
2013
67.7
67.4
67.1
66.8
34.4
35.1
35.7
36.3
12.8
12.8
12.9
12.9
89.3
89.7
89.9
90.2
15.6
15.5
15.4
15.4
73.7
74.2
74.5
74.8

11
2014
66.6
37.0
12.9
90.7
15.3
75.4

12
2015
66.3
37.6
13.0
90.9
15.2
75.7

13
2016
66.0
38.3
13.0
91.3
15.2
76.1

14
2017
65.7
39.0
13.1
91.6
15.1
76.5

15
2018
65.4
39.6
13.1
91.9
15.0
76.9

16
2019
65.1
40.3
13.2
92.2
15.0
77.2

Equity Cash Flow Calculations

7
8
9
10
11
2010
2011
2012
2013
2014
20.0
19.7
19.3
18.9
18.3

12
2015
17.6

13
2016
16.8

14
2017
15.9

15
2018
14.8

16
2019
69.4

derived from the two methods because when using the Equity Valuation method, we only use the Equity
of equity hence, we take into account less assumptions and variables. When using the Enterprize Valuation
ws. Since WACC is a only a weighted average, it may not be able to predict the most accurate value. Secondly,
neralizations in the form of Idiosyncratic Risk, Default Spread and Sovereign Spread which might not
sumptions and varirables would be the reason in giving us a different equity value.

18
19
20
21
2021
2022
2023
TV
64.5
64.2
63.9
41.6
42.3
42.9
13.3
13.3
13.4
92.8
93.2
93.4
14.8
14.8
14.7
78.0
78.4
78.7
415.9
TV growth rate
3%
The FCF growth rate for AES is pegged at around 1% according to various sources and research.
This combined with the targeted inflation rate of 2-3%, can allow us to safely assume a 3% growth
rate for the Free Cash Flow generating from the plant. This can also be seen by analysing the growth
rate of AES up until this point by analysing their statements and while predicting it's performance
through the pro-forma calculations also.

ue. Secondly,

17
2020
64.8
40.9
13.2
92.5
14.9
77.6

17
2020
69.8

18
2021
70.3

19
2022
70.7

20
2023
71.1

21
TV
535.1