Demand Analysis

KEY DEMAND FACTORS

• Price and Volume – Strong as they have increased together for about 1.5 years
• Institutions and Mutual Funds – Very Good as 16% ownership leaves lots of room for growth
• Inside Ownership – N/A since information is not available

Ratio Comparison

			ACTUALS				5 Year Averages
	2002	2003	2004	2005	2006	2007	Actual	Projection
Valuation
P/E Ratio	-21.4	19.9	8.0	9.0	4.9	7.0	9.78	8.52
Price to Sales	0.7	0.8	0.5	0.7	0.8	1.0	0.75	1.17
Price to EBITDA	7.8	4.4	2.9	3.6	2.5	3.4	3.37	4.09
Management Effectiveness
Return on Investment	-1.48	2.12	4.84	5.86	13.29	10.59	7.34	8.01
Return on Equity	-2.42	3.52	7.20	9.16	19.49	15.37	10.95	13.22
Financial Condition
Total Debt to Equity	0.68	0.71	0.62	0.60	0.61	0.48	0.61	0.65
Interest Coverage	0.18	2.31	4.80	4.29	8.19	6.39	5.19	6.16
Profitability
Gross Profit Margin	70.93	70.00	70.75	71.14	72.56	67.86	70.46	66.20
EBITDA Margin	8.38	17.90	18.99	18.58	32.86	28.72	23.41	28.90
Net Profit Margin	-3.05	3.86	6.68	7.39	16.74	13.80	9.70	13.74
Dividend
Dividend Yield	0.00	1.35	3.42	2.72	4.57	3.82	3.18	3.15
Payout Ratio	0.00	0.27	0.27	0.24	0.23	0.27	0.26	0.27
Growth
P/E/G							-0.03	0.68

COMPARISONS

• Valuation –projected ratios are very close to historical
• Management Effectiveness – these ratios are conservatively less than historical
• Financial Condition – debt is projected at current levels
• Profitability – projections are also very close to current actual ratios
• Dividend – also projected very close to historical
• Growth – P/E/G projected below 1.0

Earnings Projections

COPEL (ELP)
Earnings Model ($M)
	2007	2008E	2009E	2010E	2011E	2012E	Forecast
Revenue
Power Sales to Customers	3,208	3,529	3,882	4,270	4,697	5,167	10.0%
Power Sales to Distributors	779	857	943	1,037	1,141	1,255	10.0%
Charges for Power Grid	160	168	176	185	194	204	5.0%
Other	255	293	337	388	446	513	15.0%
Total Revenues	4,402	4,847	5,338	5,880	6,478	7,139	10.2%
- Direct Operating Expenses	1,415	1,584	1,775	1,988	2,226	2,493	12.0%
Gross Profit	2,987	3,263	3,564	3,892	4,252	4,645	9.2%
Less Operating Expense
Investment & Insurance	1,092	1,179	1,274	1,375	1,485	1,604	8.0%
Total Depreciation & Amort.	224	245	267	291	317	345	9.0%
Other Costs & Expenses	831	889	951	1,018	1,089	1,165	7.0%
Total Expenses & Items	2,147	2,313	2,492	2,684	2,891	3,115	7.7%
Other Income & Items Net	200	200	200	200	200	200	0.0%
EBIT	1,040	1,149	1,271	1,408	1,560	1,730	10.7%
- Interest Expenses	163	182	204	229	256	287	12.0%
Pretax Income	877	967	1,067	1,179	1,304	1,443	10.5%
- Income Taxes	251	290	320	354	391	433
Minority Interest	(18)	(18)	(18)	(18)	(18)	(18)	0.0%
Net Income	608	659	729	807	895	992	10.3%
Tax Rate	28.6%	30.0%	30%	30%	30%	30%
Dividends Paid	163	179	197	216	238	262	10.0%
EBITDA	1,246	1,376	1,520	1,680	1,859	2,057	10.5%
Shares outstanding (000,000's)	274	274	274	274	274	274	0.0%
Diluted Shares outstanding	274	274	274	274	274	274	0.0%
Earnings Per Share
Basic	$2.22	$2.41	$2.66	$2.95	$3.27	$3.62	10.3%
Diluted	$2.22	$2.41	$2.66	$2.95	$3.27	$3.62	10.3%
Source: estimates

ASSUMPTIONS

• All segments projected conservatively below recent historical growth
• Expense growth will continue to be less than sales growth

Earnings History

COPEL (ELP)
Annual Income Statements ($M)
	2007	2006	2005	2004	2003	2002	I Yr.	5 Yr.
Revenue
Power Sales to Customers	3,208	2,577	2,260	1,735	1,291	940	24.5%	27.8%
Power Sales to Distributors	779	605	407	168	115	55	28.8%	70.1%
Charges for Power Grid	160	133	115	79	39	42	20.1%	17.9%
Other	255	162	132	102	82	26	57.2%	57.8%
Total Revenues	4,402	3,477	2,914	2,084	1,527	1,063	26.6%	32.9%
- Charges & Deductions	1,415	954	841	610	458	309	48.2%	35.6%
Gross Profit	2,987	2,523	2,073	1,474	1,069	754	18.4%	31.7%
Less Expenses & Items
Electricity & Grid	1,092	925	843	480	459	272	18.0%	32.0%
Total Depreciation & Amort.	224	174	141	116	102	80	28.6%	23.0%
Other Costs & Expenses	831	698	738	647	459	313	19.1%	21.6%
Total Expenses & Items	2,147	1,797	1,722	1,244	1,020	665	19.5%	26.4%
Other Income & Items Net	200	243	49	49	122	(80)	-17.8%	-220.1%
EBIT	1,040	968	401	279	171	9	7.4%	156.6%
- Interest Expenses	163	118	93	58	74	53	37.7%	25.0%
Pretax Income	877	850	307	221	97	(44)	3.2%	-281.9%
- Income Taxes	251	261	85	74	33	(12)	-3.9%	-284.9%
Minority Interest	(18)	(7)	(7)	(8)	(5)	-	178.6%
Net Income	608	582	215	139	59	(32)	4.4%	-279.8%
Tax Rate	28.6%	30.7%	27.6%	33.4%	34.0%	26.4%	-6.8%	1.6%
Dividends Paid	163	132	53	38	16	-	23.4%
EBITDA	1,246	1,136	534	388	268	89	9.7%	69.5%
Shares outstanding (000,000's)	274	274	274	274	274	274	0.0%	0.0%
Diluted Shares outstanding	274	274	274	274	274	274	0.0%	0.0%
Earnings Per 1,000 Shares
Basic	$2.22	$2.13	$0.79	$0.51	$0.22	($0.12)	4.4%	-279.8%
Diluted	$2.22	$2.13	$0.79	$0.51	$0.22	($0.12)	4.4%	-279.8%
Source: COPEL Annual Reports

NOTES

• All power areas have had solid growth for five years
• Telecommunication (Other) is experiencing explosive growth
• Expenses have increased at a slower pace than revenues

Investor Summary

COPEL	NYSE:	ELP
Electic Utilities	TARGET:	$22.50

Stock Data			Sales & Earnings	2007A	2008E	2009E
Price 11/30/2007	$15.53		Revenue (MM)	$4.4	$4.8	$5.3
52-Week Range	16.36 - 20.25		EBITDA (MM)	$1.2	$1.4	$1.5
Dividend Yield	3.8%		EPS (diluted)	$2.22	$2.41	$2.66
Capitalization			Value Measures
Shares Outstanding (MM)	273.66		Price/Earnings	6.99	7.77	8.45
Market Capitalization (MM)	$4.2		Price/Sales	0.97	1.06	1.18
Debt/Equity	0.48		Price/Book	1.08
Projections			Growth (5 Yr.)	Historical	Projected
12-Month Price Target	$18.69		Earnings	-279.8%	10.3%
24-Month Price Target	$22.50		P/E/G	(0.03)	0.68
Annual Total Return	24.2%

KEY AREAS FOR GROWTH

• Alternative Energy Sources – Hydroelectric power generation
• Emerging Market Electrical Power – Brazilian power generation & distribution
• Other – telecommunications
  

MAJOR RISK
A move away from privatization in Brazil would be disastrous.