投资银行在产业中的应用(1)

L:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\1InvestmentBankingViewoftheUtilityIndustry21September2005投资银行在产业中的应用TableofContentsL:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\2Section1UtilitySectorUpdateSection2PerspectivesonRecentStrategicActivitySection3EnergyPolicyActSection4TransmissionEnvironmentUpdateAppendixABio–TimothyR.SchwarzSection1UtilitySectorUpdateL:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\4UtilitySectorUpdateABraveNewWorldofGrowthisEmerging…L:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\5•Growthstocksarestartingtomakeacomebackafter5consecutiveyearsoftrailingvaluestocks–Year-to-dateperformancesupportsourview,asgrowth,measuredbytheBarraindexes,hasmarginallyoutperformedvalue.Moretellingcouldbethatgrowthhastriumphedovervalueduringeachofthelastsixmonths–However,unlikepastreboundsingrowthstocks,weexpectaGARPorientationtodominateduringthiscycle–Earningsgrowthanddividendgrowthhavereconnectedafterthelongabsencethatdefinedthe1990s171%(35)%43%45%72%-60%-40%-20%0%20%40%60%80%1960's1970's1980's1990's2000'sSignsofnormalcy?CorrelationBetweenDividendGrowthandEarningsGrowthSourceS&P,ThomsonFinancial,MorganStanleyResearchSourceS&P,ThomsonFinancial,MorganStanleyResearchPastTwoGrowth/ValueCyclesCycleStartEnd#ofMthsGrowthJul-89Dec-9129ValueDec-92Jan-9413Flat/ModestGrowthTiltFeb-94May-9852GrowthMay-98Feb-0021ValueJul-00Nov-0453SourceIbbotson,MorganStanleyResearch-60%-40%-20%0%20%40%60%197319791985199119982005IndexofRelativeStrengthofGrowthvs.ValueEffectivenessSourceMorganStanleyResearchApr77Oct84Jul94NiftyFiftyPeakEnergySectorPeakKuwait/RecessionTech2000GrowthValue(30)(20)(10)01020301975198019851990199520002005Growthvs.ValueFlip-FlopsModestgrowthtiltGrowthcyclesgetstrongerovertimeDéjàVu:WeThinkGrowthInvestorsAreLookingatSomethingAkintothe1994-1997PeriodS&P500GrowthRelativetoS&P500ValueAnnualTotalReturnGrowthValueUtilitySectorUpdateUtilitySectorSensitivitytoInterestRatesNotes1.ForecastasofAugust8,2005;allforecastvaluesarefortheendoftheindicatedperiodL:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\6•WiththeFedtightening10consecutivetimes,U.S.long-terminterestrateshavenotriseninlinewithexpectations•U.S.utilitieshavenotbeenassensitivetointerestratemovementsashistoricallyobserved•MorganStanleyforecaststhatthe10and30yearUSTreasurieswillreach4.75%and5.0%,respectively,bytheendoftheyear2SourceFactSetandMorganStanleyResearch8.010.012.014.016.018.0Jul-95Feb-97Sep-98Apr-00Nov-01Jun-03Jul-053.03.94.85.76.67.5S&PUtilitiesFY1P/EU.S.30-YrTreasuryS&PUtilityIndexFY1P/Eand30-YearTreasuryYieldP/E(x)Yield(%)SourceBloombergandMorganStanleyResearchandTheWallStreetJournal4.354.855.005.303.503.754.004.254.504.504.164.604.755.005.105.155.355.353.003.504.004.505.005.50August29,200505Q305Q406Q106Q206Q3FedFunds10YrUST30YrUSTInterestRateOutlook(1)%L:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\7UtilitySectorUpdateUtilitySectorValuationRelativetoBroaderMarket3•Currentvaluationsarenotcompellingasthesectoristradingclosetoonestandarddeviationaboveitslong-termaverageonmostmetrics•Valuationsalsoareunattractiverelativetothebroadermarket•Utilitysectortradingat107%oftheS&P500onaforwardP/Ebasis,abovethe5-yearhistoricalaverageof74%EntryandExitPointsMetricOverweightUnderweightRelativeP/E50%to60%75%to80%AbsoluteP/E10–11x14–17xYieldSpreadtoS&P500300bps150bpsSourceFactSet,Bloomberg,MorganStanleyResearchSourceFactSet,Bloomberg,MorganStanleyResearchNotes1.MorganStanleyResearchdataasofSeptember6,20052.MarketdataasofSeptember6,200540.050.060.070.080.090.0100.0110.0Apr-95Mar-96Feb-97Jan-98Dec-98Nov-99Oct-00Sep-01Aug-02Jul-03Jun-04Aug-05RelativeFwdP/E(%)1.001.502.002.503.003.504.00YieldSpread(100bps)RelativeFY1P/E(UtilityP/E/S&P500P/E)YieldSpread(UtilityYieldvs.S&P500Yield)RelativeValuation(S&PUtilityIndexvs.S&P500Index)RelativeSectorValuationFwdP/E(1)LTMP/E(1)Yield(bps)(2)S&PUtilitiesSector16.318.4331S&P50015.217.1184%ofS&P500orSpreadtoS&P500107%108%1473Yr.Avg.80%74%2135Yr.Avg.74%70%206Premium/(Discount)over3/5Yr.Averages28/34%33/38%45/41%UtilitySectorUpdateInvestorPerceptionoftheUtilitySectorL:\UTILITIES_NY\DEPT_ONLY\PersonalFolders\BLUX\TimSchwarz\UtilityIndustryPresentation.ppt\A2XP\16SEP2005\5:55PM\8•MorganStanleyrecentlyconductedaninformalsurveyofthetop25investorsintheutilitysectoraskingtwofundamentalquestionsoncurrentvaluationlevelsandtheirsustainability4Question#1:“Theoutperformanceoftheutilityindustryrelativetoothersectorsforthepast12-18monthshassurprisedmanyintheinvestmentcommunity,whatdoyouthinkaretheprincipalfactorssupportingthisphenomenon?”•MacroFactors–Interestrateenvironment–Risk-adjustedgrowthrelativetobroadermarket–Lackofdirectionforbroadereconomy–Taxlaw