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Endesa Gains in Chile on Bets Earnings to Recover in 2013

Empresa Nacional de Electricidad SA, Chile’s largest power generator, posted its biggest four-day gain in more than a year amid speculation that earnings growth will resume after three years of declines.

Endesa, as the company is also known, rose 2.7 percent to 833.28 pesos at the close of trading in Santiago. Shares gained 6.7 percent in the past four days, the biggest advance in such a period since August 2011. The benchmark Ipsa index fell 0.2 percent today and is up 0.9 percent this week.

Endesa’s 2012 profit fell 48 percent to 234 billion pesos ($495 million) as lack of rain in Chile forced the company to rely on more expensive thermoelectric generation, according to filings sent to regulators Jan. 30. The drop came after a 16 percent decline in the previous year and 15 percent slump in 2010, according to data compiled by Bloomberg. Profit is projected to increase 95 percent this year, according to the average estimate of seven analysts surveyed by Bloomberg.

“Investors are betting on improved results this year after a weak 2012,” Sergio Zapata, an analyst at the brokerage unit of lender Corpbanca, said in a telephone interview. “We expect Endesa to improve results this year at least to 2011 levels.”

The start-up this year of its new Bocamina 2 coal-fired plant should help Endesa boost profits this year, even in a dry scenario, Zapata said.

‘Most Attractive’

“Investors must be directing funds to Endesa because it’s the most attractive stock in the electricity sector,” Marcelo Catalan, an analyst at Banco de Credito e Inversiones (BCI), said by phone. “Its controller, Enersis, is ending its capital increase and that takes negative pressure off, and Endesa will also face lower generation costs this year and higher profit thanks to the start-up of the Bocamina plant.”

Enersis shareholders have until March 26 to participate in a rights offering through which the company plans to raise about $6 billion. Its controlling shareholder, Spain’s Endesa SA, will pay for its part through the transfer of $3.6 billion in assets in Latin America, while the cash raised from minority holders will be used for expansion, according to presentations on Enersis’s website.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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