Tag Archives: brazilian

Pulling More Levers Across Emerging Markets

By Morgan Harting After five difficult years, signs of life are emanating from emerging markets. Investors seeking to rediscover the developing world might consider the benefits of pulling more levers across asset classes. Since the global market correction in January, investors have been taking a fresh look at emerging markets. The MSCI Emerging Markets Index has risen by 21% since January 21 in US dollar terms, through March 21, outperforming global developed stocks. Meanwhile, the J.P. Morgan Emerging Market Bond Index has advanced by 7%. Fund flows to emerging market equities and debt have been positive for several weeks following three years of net outflows for equities and one year of net outflows for bonds. Improving Risk-Adjusted Returns Yet for many investors, emerging equities still seem scary. They’re much more volatile than their developed market peers, so there can be a cost to accessing their return potential. That’s why a multi-asset approach can be very effective. By reducing risk significantly, it can help investors maintain exposure to the underlying long-term growth story that underpins the attraction of investing in the developing world. Our research compared the risk-adjusted returns of four approaches in emerging markets: 1) a cap-weighted equity index; 2) a skillful tilt toward better-performing equity countries and sectors; 3) a multi-asset approach that bolts together equity and debt indices; and 4) a portfolio that skillfully tilts toward the top-performing-quartile country and sector within each asset class. Bolting together emerging market stock and bond indices would have outperformed an allocation to passive equities – and generated stronger risk-adjusted returns than even a skillful stock picker could have achieved (Display). But an equally skillful multi-asset manager that tilted toward better-performing countries and sectors in stocks and bonds would have done even better, our research suggests. Click to enlarge Stocks and Bonds Move in Tandem Why does an integrated multi-asset approach work so well in emerging markets? Performance patterns can help answer this question. Stock and bond markets in developing countries are highly correlated, meaning they tend to move in the same direction. But emerging stocks are also much more volatile. As a result, when investors are optimistic about a country’s growth prospects or diminishing risk, capital inflows to local markets often fuel gains for both stocks and bonds. Conversely, concerns about financial stability or recession usually hurt both asset classes. Higher bond yields trigger an increase in the discount rate applied to company earnings, which pushes down stock prices. Take the recent example of Brazil, which slipped into recession last year. Investors sold both Brazilian stocks and bonds, which declined 41.4% and 13.4%, respectively. More recently, as investors became optimistic about a potential change in government, Brazilian assets have rallied, with stocks and bonds up by 29% and 12.7%, respectively, for the year through March 21. So combining emerging stocks and bonds in a single portfolio preserves the underlying risk exposure, but at a significantly lower level of volatility, in our view. And the reduction in volatility will often outstrip any reduction in returns, underpinning a dramatic improvement in risk-adjusted returns, as shown above. Dispersion Within an Asset Class Isn’t Enough Brazil’s recent volatility highlights the challenge. The emerging equity index spans 24 countries and nearly as many industries, affording an active manager ample opportunity to take active positions and outperform an equity index . Yet, when emerging stocks collectively face downward pressure, there aren’t enough places for an equity-only manager to hide. Last year provided a good example when the emerging equity index fell 15%. The quilt display below shows that India was the top-quartile segment in equities, falling 6%, while the worst quartile was Mexican telecom, down 31%. So even if a skilled manager put all of her eggs in the top equity quartile basket, the portfolio would have suffered significant losses. Click to enlarge Widening the opportunity set to include bonds could have dampened the downside risk. Even the worst-performing quartile of dollar-denominated government bonds – Tanzania – outperformed the best equity quartile. This dynamic is not unusual. The worst quartile of dollar sovereign bonds outperformed the best quartile of equities in 2011, and in 2008 as well. Combining emerging-market equities and bonds in a multi-asset portfolio gives a manager more options to find the right balance of returns. We believe this type of structure can provide a strategic advantage over bolting together independent equity and bond portfolios. It’s too early to say whether the tide has definitively turned in emerging markets. But recent enthusiasm might be a signal for investors who are underexposed to emerging markets to think about reentry. By pulling more levers from the broadest universe of securities in a portfolio of carefully chosen stocks and bonds, we believe investors can regain the confidence to return to emerging markets and capture smoother return patterns through the volatile conditions ahead. The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

Why Brazil ETFs Are Gaining Despite Economic And Political Risks?

The Brazil stock market has been one of the best performers this month with the benchmark Ibovespa gaining 16% as of March 24, 2016. Several Brazilian ETFs – Shares MSCI Brazil Capped (NYSEARCA: EWZ ), Market Vectors Brazil Small-Cap ETF (NYSEARCA: BRF ), iShares MSCI Brazil Small-Cap (NYSEARCA: EWZS ) and Global X Brazil Mid Cap ETF (NYSEARCA: BRAZ ) – have jumped 28.3%, 20.3%, 24.7% and 19%, respectively, in the last 30 days (as of March 24) (read: Catch these Brazil ETFs on a Rebound ). The rally came on the back of speculations regarding a change in government. Brazil has been witnessing a highly charged political drama since the beginning of this month when speculations that President Dilma Rousseff will be impeached were afoot. Even her major coalition partner, the Party of the Brazilian Democratic Movement (PMDB), is working on policies including welfare cuts if the Rousseff government is toppled and it comes to power. Meanwhile, the Brazilian Bar Association has filed a new request for impeachment proceedings to Congress. Rousseff is under political pressure regarding one of the largest corruption controversies in Brazil. The bribery scandal surrounding Brazil’s national petroleum company Petrobras continues to involve several of the country’s politicians. Investors in favor of a change in government believe that new leadership could be in a better position to revive the battered economy. Apart from that, markets were also buoyed by potential rate cuts by Brazil’s central bank. Although in its meeting earlier in March, the central bank kept the benchmark rate at 14.25%, several analysts believe that it might consider lowering interest rates later in the year. A rate cut could help boost consumer and corporate spending. Once the star performer of BRIC and emerging markets, Brazil is currently in shambles thanks to the economic slowdown and an endless streak of corruption scandals. A new government could infuse a fresh lease of life into the ailing economy which otherwise is expected to contract for the second straight year in 2016. After shrinking 3.9% in 2015, the economy is expected to contract by 3.5% this year. Other worrying factors include an increasing unemployment rate, rising inflation and the currency losing its value. Although it is questionable how long the rally will continue, a new government might revive the moribund economy. So, investors looking to tap into this market could consider the following ETFs in the days to come. EWZ in Focus This product tracks the MSCI Brazil 25/50 Index and is the largest and most popular ETF in the space with AUM of over $2.6 billion and average daily volume of more than 20.6 million shares. It charges 64 bps in fees per year from investors. Holding 61 stocks in its basket, the fund is highly concentrated in its top two holdings with one-fifth of the portfolio invested in them. In terms of industrial exposure, financials dominates the fund’s return at 35.5%, followed by consumer staples (19.8%), energy (10.3%) and materials (9.6%) (read: Fragile Five ETFs Not At All Fragile This Year? ). BRF in Focus This fund provides exposure to the small cap equities of the Brazilian market and tracks the Market Vectors Brazil Small Cap Index. The fund holds a total of 57 small cap stocks and has a total asset base of $76.9 million. The fund trades an average daily volume of 58,000 shares. The fund is well diversified with no stock holding more than 5% of weight. Among the different sectors, consumer discretionary and consumer staples occupy the top two positions with 42% of investment made in these two categories. Market Vectors Brazil Small-Cap ETF charges a fee of 60 basis points for the investment. Investors, however, should invest in small cap companies with caution as these are more volatile than their large cap counterparts. EWZS in Focus Another fund tapping the small cap companies of the Brazilian market is EWZS. The fund seeks to track the MSCI Brazil Small Cap Index. The fund has a total asset base of $19.9 million and trades in average daily volume of almost 43,000 shares. The fund holds a total of 52 stocks with none holding more than 6.5% weight. Among sectors, the fund has almost 40% of assets invested in consumer discretionary followed by industrials (16%) and financials (13.4%). The fund charges an expense ratio of 64 basis points (read: Emerging Market Crisis: 5 ETFs Down Over 30% in 2015 ). BRAZ in Focus The Brazil Mid Cap ETF has been designed to tap the mid cap market of Brazil. The fund seeks to track the Solactive Brazil Mid Cap Index. The fund, through an asset base of $3.3 million, taps 41 stocks. The fund has an average daily volume of 1,400 shares. However, BRAZ appears to be highly concentrated in the top 10 holdings with 51% of the assets invested in those securities. Among sectors, the fund has 19% invested in utilities, thereby holding the top position in terms of sector exposure. The investors pay an expense ratio of 69 basis points for the investment made in the fund. Original Post

Companhia Paranaense de Energia’s (ELP) CEO Luiz Fernando Leone Vianna on Q4 2015 Results – Earnings Call Transcript

Companhia Paranaense de Energia (COPEL) (NYSE: ELP ) Q4 2015 Earnings Conference Call March 18, 2016, 09:00 AM ET Executives Luiz Fernando Leone Vianna – Chief Executive Officer Luiz Eduardo da Veiga Sebastiani – Chief Financial Officer and IR Officer Gilberto Mendes Fernandes – Officer of Business Management Jonel Nazareno Iurk – Business Development Officer Antonio Sergio de Souza Guetter – President of Copel Distribuição Ricardo Goldani Dosso – Chief Executive Officer of Copel Renováveis. Analysts Carolina Carneiro – Banco Santander Miguel Rodrigues – Morgan Stanley Lilyanna Yang – UBS Operator Operator Good morning and thank you for waiting. Welcome to the Companhia Paranaense de Energia Copel Call to present the Fourth Quarter 2015 Earnings. I would like inform you that all participants will be in a listen-only mode during the company’s presentation. And following, we’ll start our Q&A, when further instructions will be given [Operator Instructions]. Before we continue, we would like to make clear that any statements made during this conference call involving Copel’s business outlook or financials and operating forecast and this constitute to beliefs and assumptions of the company’s management and information currently available. Forward-looking statements are not guarantees of performance and involve risks, uncertainties and assumptions given that they refer to future events and, thus are dependent on circumstances, which may or may not occur. The general economic conditions, industry conditions and other operating factors could come to affect strategic performance of Copel, and lead to results that the materially different from those expressed in such forward-looking statements. We have presented with us at this call Mr. Luiz Fernando Leone Vianna, CEO of the company, Mr. Luiz Eduardo da Veiga Sebastiani, CFO and IR Officer, Mr. Gilberto Mendes Fernandes, Manager of Business or Officer of Business Management, Mr. Jonel Nazareno Iurk, Business Development Officer and Mr. Antonio Sergio de Souza Guetter, President of Copel Distribuição and Mr. Ricardo Goldani Dosso, CEO of Copel Renováveis. The presentation will be followed on the company’s website www.copel.com/ir. Now, we would like to ask Mr. Luiz Fernando Vianna, the company’s CEO. Please Mr. Vianna, you may proceed. Luiz Fernando Leone Vianna Good morning. Thank you very much. Good morning analyst, the press, investors and all the interests in our Copel. And welcome to our call on the results of the fourth quarter 2015. Thank you for all those, who follow us. And I would like to say that [indiscernible] very much to talk to you. I wish to talk first of all about the events, which was significant in 2015. Especially which contribute throughout the rebalancing of the electric sector. First of all, let’s talk about generation, and today we see it in new status with much news about floods during the consequences. Last year, the situation was totally different, the hydrologic prices reached its peak and our [reservoirs] (Ph) hit the lowest level, historic level shrinking the capacity for hydro generation, which was a 15% below, we expected in 2015 and really because for the purchase of energy and it was very difficult to adjust the coverage of the contracts of those who have water as their main source of energy. All this problem is because the agents of the sector mobilized to make possible – to re-access the hydrological risk a solution which brought a little bit of relief for the cost of generators and contributed to mitigated risks that much costs up in the period of critical hydrology and the dispatch – a thermal dispatch. Copel offered to re-access the hydrological risk of the CCEAR. For Copel GeT and Mourão with a recognition of 134.7 million in the fourth quarter to recover cost for the purchase of energy. On the side of the distribution, [indiscernible] of the Brazilian economic crisis which are reflects for the consumption of energy contributed to a drop of 0.7% of the captive markets of Copel Distribution in 2015, the result is negative. However, it is much better than that of Brazil as a whole, which dropped 1.7% clearly showing a greater resilience of the Parana economy even in an economically adverse the situations which Brazil finds itself. The drop in the consumption of energy also come from the so called [indiscernible] which began to be present with the introductions of the tariff flag and the extraordinary tariff review carried out in the beginning of 2015 in April. These mechanisms which got significant readjustments for consumers, were essential to make the tariffs more adequate to the reality and the cost to protect us and consequently adjusted greatly weaker cash position of the distribution. In 2015 Copel Distribuição receives 960 million through the tariff flag resulted which we use to knock off cost for the purchase of energy and charges. Another significant drop was the conclusion of the process of review of the distributors concessions. In December, we sign the fifth addendum to the contract of concession of Copel Distribuição which extends the concession until July of 2045 and it brings about new conditioning factors of financial economic and quality efficiency to be complied with this year. And talking about Copel Distribuição, [indiscernible] has a new CEO in 2016, Mr. Antonio Sergio de Souza Guetter, a carrier employ of Copel, Mr. Guetter is a Civil Engineer and helps the position of CFO and IR and in 2014 and many other executive job throughout his carrier in Copel and [indiscernible] Copel. I’m quite sure that Mr. Guetter will greatly contribute to the continuity of the business particularly at this moment in which then renew concessions is imposing new challenges. On our next slide, I would like to say that in 2015 we kept up to pace and we once again surpass the total of R$2 billion in investments. For 2016, the number is even larger, we plan to invest R$3.2 billion and part of this amount will be [emerged] (Ph) through generation, including the construction of wind farms and the payment of the concession of the Governador Parigot de Souza plant which was won back in November of last year. With this new concession contract already signed, Copel generational transition will operate it and maintain the plant paying the plant until 2046. Adding in 2016, a revenue of the service fees of 130 billion a year. And as from 2017, the seismic revenue, we will also announce the revenue from the sale of energy 30% of the total of the energy at this plant which will the Copel will be able to sell. We also won the right of building and operating three substations and 230 kilometers of transition lines in Parana and Santa Catarina. These projects were won without a discount and when operational will add R$19 million to Copel GeT work and still regarding ongoing project in January of this year and we’ll recognize 626 days with a responsibility for the hydroelectric plant Baixo Iguaçu and [indiscernible] already other obligation selling from the delay. And in 2018, we will have the first turbine coming online. And finally, I would like to say that in January of this year, Copel Comercialização was establish, which has as an objective reinforce the position of Copel in this market allowing for greater agility and also flexibility in the commercialization of sale of energy. The subsidiary will add in a segment with potential of growth and will be able to sell both conventional energy and energy with incentive. Now I would to ask Luiz Eduardo Sebastiani, our CFO and IR Officer, who will going to further details on the earnings of the period. Luiz Eduardo da Veiga Sebastiani Thank you so much, Mr. Vianna. Good morning and thank you once again for participating in this call of results. I would like to start with some remarks about the company’s leverage level. As you can see on slide five, the Copel’s debt level measured by the net debt over EBITDA ratio grew in the last few years and 2.8 times at the end of 2015, in-spite of the growth our indicator is that with adequate systems [indiscernible] covenant was 3.5 times. It’s also important to remember that the increase is connected to our robust program of investments as mentioned by our president. And also we have to mention the important part is developed towards BNDES and this will allow the financial support necessary to implement several projects of the company that we are already using and having ahead of us. As we have already told the market in January, we are working on the issuance of 300 million in debentures for wind farm Brisa Potiguar which will be underwritten by the BNDES and BNDESPAR. These debentures have differentials for the term of 16 years and the fact that will be split into two series. One will be paid to the long-term interest rate and the other is for the adjusted consumer price index and will be an important reduction of financial costs. And with all these earnings and details, we would like to talk about something non-recurring index which had an impact on the company, especially in the fourth quarter. The most relevant of that has to do with legal question and we had an important progress in our mitigation with [indiscernible] engineering. In October 2015, the superiors of the court announced a sentence of the Justice Court of Paraná, which sentenced Copel to pay 540 million regarding execution of work for the low hydroelectric plant about regarding the bypass of the Jordão River. Based on this decision, the company has revised this loss of estimated from the suit and recognize a reversion of 210 million in the fourth quarter 2015. Another important events was the test of impairments in the assets of generation, which led to reversion 66 million recognized in 2014 motivated by better hydrologic conditions, which increased the outlook of generation for 2015. And we also had a renegotiation of the hydrologic risks, which led us to reversion of 135 million of cost for the purchase of energy that already as mentioned by our CEO. Slide six. Showing the earnings, the operating results which grew 6% in 2015 surpassing the total of 14.7 billion, the main motive for this expansion was a growth of 32% in the revenue on the delivery to end customers, reflex of the readjustment supply to the tariff to Copel Distribuição during 2015. Again which we had two adjustments were necessary to deal with the increases of cost with charges of energy. On the other hand, the revenue of delivery to use the utility, which shows a great part of sales of the Copel GeT and [indiscernible] Araucária Thermoelectric had a reduction of 15% in 2015 reflecting a reduction of the stock price. And the revenue from availability had a growth of 7% reflecting this effect of this ratios partially impacted by the retraction of the good market of the distributor. On the item other operating revenues has increased to 33%, particularly the expansion of the client based of Copel Telecom and [indiscernible]. In the next slide we have detailed the cost and the operating expenses, which totaled almost 13 billion in 2015 and amount 5% above that was [indiscernible] in 2014, which stems to a great extent to the increase of across both for retail, which rose 19% year-on-year. This increase reflects the higher cost of the acquisition of Itaipu Energy, which rose significantly due to the reinvestment of the tariff or depreciation and the readjustment of contracts by inflation and the end of the transfer of resources from CDE and the ACR accounts. And we had more expenses with the charge against the good use and the greater dispatch of the thermal plant. Management’s costs went up 14% because of more expenses with personnel and third-party services and inflation, and the necessary costs to [indiscernible] Copel quality standards and we had a great quantity of the good periods, climate events throughout the year in Parana. Now this line of provisions and reversion show the reduction of 83% of for the period due to the reversions of the litigation of [indiscernible] and impairment already mentioned. Slide 8 shows the details for 10% of amount above the booked in 2014 totaling 2.6 billion in 2015 with the margin of 18% over the operating revenues. The first generation of Copel generating plant which accounts for 68% for the consolidated EBITDA, Copel Distribuição accounts for 12% and Copel Telecom 4% the other group companies which account for 16% and the main contribution came from the Thermoelectric Araucária. Regarding the EBITDA Copel GeT closed 2015 with the margin of 61% Distribuição was 3% and Telecom 37%. As we had many extraordinary efforts in the period, we presents on Slide 9 the adjusted EBITDA of the group and the main subsidiaries. On Copel GeT notwithstanding the effect of renegotiations of ESS or the reverse of the litigation of [indiscernible] and the impairment test EBITDA would have been 17% lower than booked in 2014. And the main reason for this drop is a greater deficit of [hydroelectric] (Ph) generation and lower spot price compared to last year, but the distributor is considering that only the investment in the pictorial assets and liabilities, which was booked in 2014. 2015 EBITDA was 36% lower reflecting market attraction greater cost with the service of third-parties and with provision for several events. Notwithstanding these events, consolidated EBITDA would be 20% less than in 2014 and the plant has actually exposed to lower dispatch of the Araucária. Slide 10 will show the consolidation net income of Copel, 1.3 billion in 2015, 5% lower than that of 2014, analyzing the results of [indiscernible] with the Copel Distribuição registered an income of 206 million, a drop of 53% in comparison to 2014 an year where have the register of the total assets driving results. Copel GeT closed the period with income of 1 billion, 51% higher than that of the previous year and Copel Telecom had a profit of [55 million] (Ph) a drop of 7% year-on-year. These were our highlights and we are now [indiscernible] for questions. Thank you very much. Question-and-Answer Session Operator Thank you very much. We’ll now go on to Q&A [Operator Instructions] Our first question comes from Carolina Carneiro from Santander. Carolina Carneiro Good morning and thank you for the call. My question has to do with the cost performance. Even without reversions with provision and with furthermore plants that you mentioned in your release. We see particularly on the item other costs, we will have a significant improvement regarding other causes. So what led to the second performance of other costs and leaving aside the provisions reversions? Just to give us an idea what would be the cost performance especially in the distribution. Unidentified Company Representative Hello Carolina, I would like to ask [Technical Difficulty] manager, who will answer your questions. Unidentified Company Representative Hello Carolina. Yes, in the fourth quarter regarding other costs. We worked hard to review everything which we had in fact to review all our costs and this was a result and assets receivable and accounts receivable and [indiscernible] growth was directly with process and we want to receive these as soon as possible these outstanding assets. Carolina Carneiro And you already talked about these discussion about tariff review I’m sure. So could you give us a little idea about the expectation and what can we expect for the first number to be from date and when do you think this will be done and how much? Antonio Sergio de Souza Guetter Hello Carolina, this is Antonio from distribution. Thank you for your questions about the tariff review. What I can tell you is asset base has doubled from 4800. And now as of next we will be checking out the numbers. And regarding the revision, product revision the numbers have already been handed over to ANEEL, they will annualize them and then they will give them back to us, submit them back to us. This would be on the 23. Carolina Carneiro Thank you. Operator Our next question from [indiscernible] from Itaú. Unidentified Analyst I have two questions. The first regarding the reversion of provision, because of some changes in the plants and hydrological risks. So what would be the driver for additional revision of this provision about 800 million and expectations. So I think in 2015, still 2016 will be – spot market will it drive some additional reversion of these 800 million. And my second question is the energy commercialization. You know that you have an excess for this year and this would increase in the next few years. So could you give us an idea of what the company is expected to re-contract this year. What you have in review? And if you allow me a third question, question of reclassifying, as all distributional companies are doing, this value that you gave us for the first quarter [indiscernible] of the variation, does this refer to all of 2015 or early for the fourth quarter. Unidentified Company Representative Hello [indiscernible] our results for the first question accounting manager. Unidentified Company Representative Hello [indiscernible]. First of all our provision for thermal, we work with the best estimates for our responsibilities, which still has to be analyzed by ANEEL. So to the objective, I would say that this variable regarding responsibility and then to the future bring some reversion higher reversion that we’ve seen in 2015. We are working hard on this negotiation on the discussion within ANEEL and the variable can bring something positive here. Regarding the third question and regarding reclassification of the exchange problem with Itaipu most distribution companies have done – do and this reflects the whole year of 2015 not just the fourth quarter. Mr. Vienna will talk about your second question about commercialization. Luiz Fernando Leone Vianna [indiscernible] well the commercialization company was to tell the purpose, the tell purpose that we have contracted and to act as a shield of keeping customers from our captive market from going to the pre-market. If consumer in terms intends to go from our captive market and we are noticing such a search, a difficulty, or we are not seeing other consumers are seeking out our commercialization company. Next one, we will have the first auction for selling energy. Unidentified Analyst And the commercialization strategy if you could break down this information please, whether it would be prudent now of a short-term product or during this medium long-term or are you really focused more short-term one year or 24 months? Unidentified Company Representative [indiscernible] we intend to focus on medium long-term, this results mean that we will have no interest in the short-term but the focus will be on medium long-term. Thank you very much. Operator Our next question comes from Miguel Rodrigues from Morgan Stanley. Miguel Rodrigues Good morning. Could you talk about the realization with the distributors so what are your plans to keep the quality metrics and what kind of investment will be needed to keep these metrics to transition period. Luiz Fernando Leone Vianna Thank you, Miguel Rodrigues. I would like to ask Ricardo Dosso, CEO of Copel Distribuição to take the floor. Ricardo Goldani Dosso Hello Miguel. The issue of the new metrics for distributors needs to be very focused on these items. Our strategy is to use as soon as possible investments in technology. We have used the benchmark to adapt our technology as fast as possible and the technologies which has already been tested throughout the world the best possible. And also the budgets for the program which that we have is such that we will be [indiscernible] the most difficult point and about the return as quickly as possible and run no risk to be exposed to long-term issues. We have a bit of leeway on first and second year to do the necessary investments to go and see the continuity of the concession for the further years and we are also coming with an estimate of what the official investment would be. And this would be integrated into the addendum as just been discussed and in operating cost how much operating costs would be needed to reach – to achieve our objective. The investments is about R$500 million for the next few years, but for 2016, 2017, 2018 this will be greater investments again to improve the quality of the grids. Miguel Rodrigues And operating costs will there the additional costs? Ricardo Goldani Dosso Yes, obviously investments in quality of the grid automatically brings – well bring debentures cost reduction. And we have to consider when possible outsourcing and I have said that we have to do a surgical analyses and attract problem generally in more rural areas where they generate high maintenance costs. So we have to use these investment to get a return [indiscernible] and we have an immediate cost reduction, also plan like therefore reducing our fleet, if we have – as I mentioned probably grids. Operator Our next question comes from Lilyanna Yang from UBS. Lilyanna Yang Thank you for this opportunity. I have two questions. First of all, the project of transmission lines. Why such a delay before coming into operation and the investments seems to be more or highly individual guidance? Second question about demand, what about the demand for the regulated sector? [Technical Difficulty]. Luiz Eduardo da Veiga Sebastiani Good morning Lilyanna this is Veiga speaking. I will ask President Mr. Vianna to take the floor. Luiz Fernando Leone Vianna In fact, we have a delay the transmission lines, it causes [indiscernible] the environment causes, what have bought these delays? We have greater concentrated our resources human, financials and now we will have at the end of the month we will start working on these lines. So finally, we will solve this. For the investment point of view, this is quite recent we have investments realized up to now of [1.560 billion and 64 million] (Ph). In this is market share, a higher market share would established 38.3%. So it’s very important to say that even CapEx is above the quarter, we are still well below the CapEx foreseen by ANEEL. But I think the most important thing is coming into operation of design from next month. Thank you. Could you repeat the second question please? Lilyanna Yang Give us some idea of what the growth of demand would be for the next year, for the next quarters. And you said Copel has rolled an auction to sell energy. So why not use your virtualization strategy and especially your special grant and why not buy energy by bilateral with your commercialization company? Luiz Fernando Leone Vianna First of all the question of the auction, we have a legal point, which we have to make this sale of energy even if it is to our own grant. This is not what to be done otherwise, but we have to give transparency, there are some requirements which we have to comply with. Now obviously our clients obviously they have special treatment. Thank you. Operator [Operator Instructions] If there are no more questions, I would like to ask our speakers to make their final remarks. Luiz Fernando Leone Vianna I would like to thank you all very much for coming. And we said, 2015 was a very difficult year and we are very pleased to be able to come to the end of this year in a very positive situation. My message is that we believe that 2016 will be even more difficult, the challenges would be even greater, but we also believe that we will have a good year for our Copel. Once again, I wish to thank you all and I wish you a good weekend. Thank you. Operator Copel call is now closed. Thank you all for your participation and have a good day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. 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