September 21, 2021 8:00 AM

Kallpa demonstrates improvement in quarterly results

buy

In early September, Kallpa (- / Baa3 / BBB-) reported a significant recovery in EBITDA versus a weak 2Q20. As a reminder, 2Q20 indicators were impacted by strict restrictions related to COVID-19. In 2Q21, sales volumes rebounded by 19% yoy to 2.435 GWh. Overall, revenue increased 4% qoq and 9% yoy to $ 132 million. EBITDA decreased 2% qoq and rose 22% yoy to $ 70 million. As a result, profitability fell due to higher expenses from 57% in 1Q21 to 53% in the second quarter, although it was significantly higher than the 48% recorded in 2Q20. Although the operating results were good, we believe that free cash flow of $ 30 mn has lagged behind, which has a negative impact on working capital.

YTM

3.2%

RISK

- / Baa3 / BBB-

DURATION

5.3

We note a decrease in accounts payable, an increase in prepaid expenses and an increase in accounts receivable. Gross debt was unchanged and remained at $ 1.10 billion, while net debt increased by a negligible $ 14 million from the previous quarter to $ 1.06 billion due to a slight decrease in cash. Gross and net leverage fell 0.2x and 0.1x to 3.9x and 3.7x respectively on higher EBITDA. Among the issuer's Eurobonds, we distinguish an issue with maturity in 2027 (ISIN-USP2400PAA77). The bonds are traded at a yield of 3.2% with a duration of 5.3 years.

Kallpa Generacion operates and develops hydroelectric power plant. The Company generates and distributes electricity, as well as produces hydrocarbons from natural gas. Cerro del Aguila serves residential and commercial customers in Peru.