2018 Outlook

• Healthy medium and long term cash flow generation capacity with stable margins at favorable levels. This is supported by concessions and water rights with no expiration, high resilience of demand for regulated services in adverse economic scenarios, accompanied by a consolidated regulatory framework. Furthermore, tariffs were set at favorable levels in 2015 and will be running until 2020, providing stability for the coming years.
• 2015-2020 investment plan is aimed to ensure continuity of service. Currently, Aguas Andinas reaches 9 hours of autonomy, and we expect the company would reach 32 hours of autonomy by year-end 2019, providing greater guarantees that supply will not be cut off from high turbidity events in the Maipo river.
• Our projections contemplate an attractive dividend yield of 5.4% (next 12M) for Aguas Andinas, positioning the sector as one of the most appealing in terms of dividend yield in Chile’s Ipsa index, a positive factor to consider particularly in light of uncertainty.

Risks

• Changes in the regulatory framework or structural reforms could impact the business, such as an amendment to the maximum return allowed. In addition, changes to tariff regulations by the Superintendence of Sanitary Services (SISS) could alter the future landscape of Aguas Andinas.
• New high turbidity events in rivers due to irregular periods of rainfall, could affect cash flow generation in the event of a supply shortage, resulting in fines incurred by the company.

Peers