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Presented by Mei-Hsuan (Michelle) Chao, Suyang (Sean) Hong,

Presented by Mei-Hsuan (Michelle) Chao, Suyang (Sean) Hong, Jung Hyun (Jane) Kim, Shen-Ho (Ron) Yang. Agenda. Company Overview Financial Analysis DCF Comparison Analysis Recommendation. Company Background. Public utility holding company Headquartered in St. Louis, MO

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Presented by Mei-Hsuan (Michelle) Chao, Suyang (Sean) Hong,

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  1. Presented by Mei-Hsuan (Michelle) Chao, Suyang (Sean) Hong, Jung Hyun (Jane) Kim, Shen-Ho (Ron) Yang

  2. Agenda • Company Overview • Financial Analysis • DCF • Comparison Analysis • Recommendation

  3. Company Background • Public utility holding company • Headquartered in St. Louis, MO • Provide electricity and natural gas service to Missouri and Illinois • Created in December 1997 by the merger of CIPSCO Incorporated and Union Electric Company • Listed on NYSE on January 2, 1998 • Acquired CILCORP Inc. in 2003 and Illinois Power Company in 2004

  4. Business Segments • Missouri regulated: • UE • Illinois regulated: • CIPS • CILCO • IP • Non-rate-regulated generation: • Genco • AERG • EEI

  5. From 2008 annual report pg 17 Location Map

  6. Regulation • The utility rates are determined by government entities such as MoPSC and ICC • Subjected to environment laws and regulations • Need approval by FERC before issuing debt and equity, merging, or acquiring utility

  7. Rate Increases • Missouri • MoPSC approved UE to increase electricity revenue by $162 mi on Jan 27th 09. • Filled in April 08, effective by Mar 09 based on 10.76% ROE. • On July 24th 09, request rate to increase be $402 mi • Expected to begin in Jun 2010.

  8. Rate Increases (cont.) • Illinois • On Sep 08, ICC approved new rate to increase Ameren’s revenue by $161 mi based on 10.7% ROE • On June 09, Ameren filled to increase $226 mi • Revised to $162 mi, decision made by Mar, effective by May

  9. Industry Issues • Political and regulatory resistance to higher rate • Uncertain access to capital and credit market • Availability of fuel and price changes • Weather (summer not as hot, winter not as cold)

  10. Recent News • Entered into multiyear credit facility agreements that provide substantial borrowing capacity through the middle of 2011 • Issued 21.9 million shares of its common stock for net proceeds of $535 million in September 2009 • Rate cases pending in Illinois and Missouri jurisdictions

  11. Most recent credit rating

  12. SWOT Analysis

  13. Competitors • Centerpoint Energy (CNP) • Electricity capacity of 51,400 mega watts, 3.2 million customers in natural gas • Exelon Corp. (EXC) • Electricity capacity of 24,809 mega watts, 5.4 million customers • Great Plain Energy Inc. (GXP) • Electricity capacity of 6,000 mega watts, 82,000 customers

  14. Earnings Summary Performance drivers ↑ Higher realized margins from non-rate regulated generation operations ↑ The absence of costs in 2008 that were incurred in January 2007 associated with electric outages caused by severe ice storms ↑ The reduced impact in 2008 of the electric rate relief and customer assistance program provided to certain customers in Illinois ↑ higher electric and natural gas delivery service rates ↓ Higher fuel and related transportation pries ↓ Increased distribution system reliability expenditures ↓ Higher plant operations and maintenance operations ↓ Unfavorable weather conditions

  15. Profitability

  16. Financial Leverage

  17. Efficiency

  18. DuPont Analysis

  19. DuPont Analysis

  20. Stock performance comparison

  21. Management Assessment • Focused on delivering safe, reliable, and affordable energy, while achieving solid returns -  A commitment to investing in our Illinois and Missouri regulated business - Building Constructive Regulatory Frame-works - Optimizing our existing non-rate-regulated generation assets - Demonstrating Environmental Leadership • Consistent management - Good at predicting economic outlook and its impact on the company

  22. Assumptions • Annual revenue growth • Electricity 9% • Gas 12% • COGS growth • Fuel declining from 9.5% and 1% decreasing every year • Gas declining from 15% and 2% decreasing every year • Depreciation • Straight line at 3% of the gross PP&E • Capital expenditure • $1,685 mi in 2009 and $6,600 mi to $8,700 mi over next four years

  23. DCF

  24. Peer Comparison

  25. Peer Comparison

  26. Correlation

  27. Portfolio Chart

  28. Current Holding Position • Purchased 400 shares at $50.03 on April 27, 2006 • Sold 200 shares at $20.84 on March 16, 2009 • Currently hold 200 shares

  29. Recommendation • The close price on November 18, 2009 is $25.88 • Based on our assumptions, the intrinsic value is $19.1~23.34 • We recommend to sell the remaining 200 shares at the market price due to the projected negative FCF and the high percentage of terminal value in the present value

  30. Sources • 2005 - 2008 Ameren 10K Reports • Yahoo Finance (finance.yahoo.com) • Google Finance (finance.google.com) • Reuters (www.reuters.com) • Ameren website (www.ameren.com) • Bloomberg • One source

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