Cia. Paranaense de Energia, the largest electricity distributor in Brazil’s South known as Copel, rose to the highest in a year after Itau Unibanco Holding SA (ITUB4) rated the utility a “top pick” as the company may benefit most from gubernatorial elections in 2010.
Copel, which was rated “outperform” by Itau, gained 2.7 percent to 31.00 reais. The Bovespa index added 1.9 percent.
“Over the past eight years, Copel has suffered with a hike in the perception of political risk,” Marcos Severine, a Sao Paulo-based analyst with Itau, wrote in a note to clients. Elections in the state of Parana next year will boost Copel as all the candidates represent less of a political risk than the current governor, he said.
Under a new state government, Copel may boost dividends to 8.4 percent in 2011 and 9.3 percent in 2012, Severine said.
MPX Energia SA (MPXE3), the energy company controlled by billionaire Eike Batista, was another Itau “top pick” as the company will benefit from the construction of three imported- coal thermal plants.
“MPX is very well arranged to succeed in the sector, combining knowledge, financial capacity and operating synergies,” Severine said.
Another Itau “top pick,” Tractebel Energia SA (TBLE3), the Brazilian power-generation unit of GDF Suez SA (GSZ), has an “aggressive growth strategy” with acquisitions in the past two years, Severine said. Tractebel may have a 5.7 percent dividend yield in 2010, he said.
“We rate them as the best vehicle of growth in the sector,” Severine said.
Tractebel rose 3.2 percent to 21.08 reais, the most since June 12. MPX fell 0.5 percent to 18.55 reais.
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