Pitch from the energy team

1. ENERGY TEAM
LU GHOSAL INVESTMENT FUND

2. Lourenço Mendes
Matteo Novelli
William Farrar
Emir Bakistanli
Vivianne Pohaci
Nicolas Garcia

3. Company overview
● Canada-based company
● Headquartered in Toronto
● Founded in 2011
● Renewable energy business
● Global leader in hydroelectric power
● Operating in the wind and solar energy sectors as well
● Present in North America, South America, Asia and Europe

4. Ownership structure
Company Share in the capital
Brookfield Asset Management, Inc. 31.65%
RBC Global Asset Management Inc. 2.28%
Principal Global Investors (Equity) 1.41%
RBC Dominion Securities, Inc. 1.31%
BMO Asset Management Inc. 1.30%
BMO Nesbitt Burns Inc. 1.30%
Other minor investors 3.01%
Shares out 57.74%
31.65%
2.28%1.41%
1.31%
1.30%1.30%
3.01%
57.74%
Brookfield Asset Management, Inc. RBC Global Asset Management Inc.
Principal Global Investors (Equity) RBC Dominion Securities, Inc.
BMO Asset Management Inc. BMO Nesbitt Burns Inc.
Other minor investors Shares out

5. Company strategy
Develop high quality
renewable power
Finance them on a
long term
Optimise cash flow

6. E
n
e
r
g
y
T
e
a
m
Revenues breakdown
• Biggest share of business is in North America
• Last year a increase in the revenues was reported
• Increase in the revenues from South America
60%
20%
5%
20%
15%
Revenue by location

7. E
n
e
r
g
y
T
e
a
m
Source: Bloomberg
Share Price Market Cap P/E Revenues Operating Income N. of Employees
45.39USD 8.306B 139.87 3.032B USD 1.097B USD 2,325
Brookfield’s Dashboard

8. ESG Company
● One of the lowest greenhouse gas emitters (GHG)
● Member of RE100
● Winner of Waste Management and Resource Efficiency Award at
Edie´s 2019 Sustainability Leaders Awards
● 99% of global core offices achieved a sustainability
designation
● Maximizing the Use of Sustainable Biofuel
● 30% board diversity policy
● Women comprise 45% of global workforce

9. Why Hydropower?
● Clean fuel source
● Independent source of energy → allows each state to produce its
own energy without relying on international fuel sources
● Low operating costs
● Hydro station consumes no water, unlike coal or gas plants
● Accounts for around one sixth of the world's total electricity
generation
● 70% share of all renewable electricity generated
● “Renewable energy to expand by 50% in next five years” [The
Guardian, October 21, 2019)

10. Political and Macro Outlook
● Hydropower is pivotal in Canada: provides 60% of total electricity
● Canadian utilities want to sell into U.S. markets → they propose to
build new transmission lines and send many terawatt-hours (TWh)
of low-carbon electricity a year into the United States
● Good point for helping the states meeting the ambitious goals for
clean energy
● Trump’s protectionist policies represent a threat
● “President Donald Trump will win reelection easily in 2020 if the
economy holds up” [Moody’s Analytics, October 15, 2019]

11. ● The Americas region accounts for 95% of the company’s revenue
● …even if Brookfield’s market share in this region is relatively small
Source: Marketline
Market Share
Source: Marketline

12. Source: Reuters
Revenues overview
• Brookfield’s Renewable Partners margins have increased
incrementally in the last few years, indicating that the company’s
profitability situation is improving
Source: Reuters

13. Company strategy
• Brookfield’s Renewable Partners have invested $100 million in
TerraForm Power Inc. and Wind farms in China, increasing its
producing capacity by 200 Megawatts
• Thus, the company will increase its revenues and diversification
• Furthermore, the company has
issued a C$600 million green bond,
which in turn will increase the
company’s average debt term to 10
yrs
• The issuance of this bond will be
highly advantageous taking into
consideration the company’s past
years interest expenses

14. Future predictions
• The company’s economic performance is expected to keep
improving in the next few years, showing an increase in both
margins and revenues

15. Competitors analysis
• Brookfield’s share performance has outperformed most of its
competitors, specially this year, with share prices increasing more
than 70%

16. Source: Bloomberg
Ratios

17. Technical analysis

18. • Oscilators (Monthly View): 3 Sell – 5 Neutral – 3 Buy so ‘’Neutral’’
• Moving Averages (Monthly View): 0 Sell – 1 Neutral – 12 buy so ‘’Strong Buy’’
• Summary (Montly View): 3 Sell – 6 Neutral – 15 Buy so ‘’Buy’’
Technical analysis

19. • Using the Python programming language, it is possible to
forecast future stock performance based on historical
information.
• Python is a useful tool in finance, there are libraries such as
numpy, pandas and scipy that help to manipulate financial
data mathematically.
• The Monte Carlo simulation iterates many possible price
pathways by utilising Brownian motion.
• The key components of the simulation are: logarithmic
returns, variance, standard deviation and drift.
Monte Carlo price prediction simulation

20. How does Monte Carlo analysis work?
Ptoday = Pyesterday x er
r = log return between two consequent days price
r = ln(Ptoday / Pyesterday)
Brownian motion in order to model r
Key components: drift and volatility

21. How does Monte Carlo analysis work?
Drift = direction the rates of return have been headed in
the past
r = average daily return – ½ variance
We use volatility (random value, normal distribution) to
help estimate the current share price in the future
Ptoday = Pyesterday x edrift – random value

23. How does Monte Carlo analysis work?
Target price: $82Target price: $82

24. Limitations of this method
• In general, Monte Carlo simulations are better suited to large
stocks as opposed to growth / small stocks
• The higher the volatility of a stock, the greater the difference
in upper and lower bound of the pathways. You can see this in
our example
• The capability of machines in investment banks outperform
those at our current disposal, therefore we could only use 10
prediction pathways
• This model is often used as a companion to other methods. In
addition, an increasing presence of AI capability improves this
method