Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

<ul><li>The drive to green power is the well-understood destructive impact of fossil fuel consumption: Investment in renewable energy is driven by the reality that the current consumption of fossil fuels, and related air pollution, water pollution, and public health costs, are unsustainable. As hundreds of millions of people push for higher living standards&mdash;and thus increased consumption of polluting resources&mdash; governments around the world are acting. With governments meeting in early December for the COP21, stronger commitments are possible. We do not expect legally binding agreements on all parties to emerge from the talks.</li><li>With policy support, high investment is set to continue: Though some governments have throttled back support following inefficient overbuild, the trend points upward in the largest markets, primarily the United States and China, and key new markets in emerging economies like India, Mexico, South Africa, Turkey, and others. With more players chasing development, and lower absolute subsidies in many cases, we think renewable energy investment returns may fall.</li><li>Ormat is our favorite way to play renewable energy generation capacity: Even though we think the stock is currently modestly overvalued, Ormat Technologies&mdash;a narrow-moat pure-play geothermal developer&mdash;is the only independent power producer with an economic moat. It has a long and impressive growth runway well beyond our five-year explicit forecast, and its baseload geothermal generation has a major operational advantage over intermittent solar and wind.</li><li>Renewable energy growth was one factor in our recent midcycle power price cuts: We recently cut our midcycle outlook for Texas power markets by 20%, primarily because of the state's huge pipeline of renewable energy projects that we expect to go into service during the next three to five years. There are more than 24.5 GW of active generation requests under review for new-build wind generation through 2020, including 11 GW in the next two years, with the state's primary grid operator, ERCOT, or the Electric Reliability Council of Texas.</li></ul>Analysts: Mark Barnett, Travis Miller, Andy Bischoff CFA &amp; Charles Fishman, CFA

The drive to green power is the well-understood destructive impact of fossil fuel consumption: Investment in renewable energy is driven by the reality that the current consumption of fossil fuels, and related air pollution, water pollution, and public health costs, are unsustainable. As hundreds of millions of people push for higher living standards&mdash;and thus increased consumption of polluting resources&mdash; governments around the world are acting. With governments meeting in early December for the COP21, stronger commitments are possible. We do not expect legally binding agreements on all parties to emerge from the talks.With policy support, high investment is set to continue: Though some governments have throttled back support following inefficient overbuild, the trend points upward in the largest markets, primarily the United States and China, and key new markets in emerging economies like India, Mexico, South Africa, Turkey, and others. With more players chasing development, and lower absolute subsidies in many cases, we think renewable energy investment returns may fall.Ormat is our favorite way to play renewable energy generation capacity: Even though we think the stock is currently modestly overvalued, Ormat Technologies&mdash;a narrow-moat pure-play geothermal developer&mdash;is the only independent power producer with an economic moat. It has a long and impressive growth runway well beyond our five-year explicit forecast, and its baseload geothermal generation has a major operational advantage over intermittent solar and wind.Renewable energy growth was one factor in our recent midcycle power price cuts: We recently cut our midcycle outlook for Texas power markets by 20%, primarily because of the state's huge pipeline of renewable energy projects that we expect to go into service during the next three to five years. There are more than 24.5 GW of active generation requests under review for new-build wind generation through 2020, including 11 GW in the next two years, with the state's primary grid operator, ERCOT, or the Electric Reliability Council of Texas.Analysts: Mark Barnett, Travis Miller, Andy Bischoff CFA &amp; Charles Fishman, CFA

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

As a part of our Long-term leaders vertical, we look at Enn Energy (ENN) which has had a tumultuous few months and still remains 23% below its Aug-14 high. We believe the long-term prospects for the sector remain strong, while the stock has priced in quite a few of the short-term negatives. We would be inclined to add to our positions here, given:<ul><li>Falling oil prices  have led to lower volume growth assumptions owing to the sliding competitiveness of natural gas vs other fuels...</li><li>...However, ENN's valuations now appear reasonable vs historic levels since over the past few months the stock has not only suffered from EPS cuts but also multiple de-rating </li><li>In addition, volume growth forecast for ENN still remains the best amongst peers. C/I make up the bulk of its customers for gas sales and they remain the most price sensitive</li><li>With NDRC recently undertaking the first cut in natural gas prices since the past 15 years, a recent change in stance, this will go a long way to revive volume growth and it portends towards more price rationalization to come which should revive volume growth</li><li>The longer term sector growth is likely to remain strong with the government intent on raising  the share of natural gas in the energy mix to 10% by 2020 from the current 5%</li><li>In addition, changing regional dynamics (Russia delivering gas to China, Japan switching on Nuclear plants) augur well for incremental supply of gas to China</li></ul>

As a part of our Long-term leaders vertical, we look at Enn Energy (ENN) which has had a tumultuous few months and still remains 23% below its Aug-14 high. We believe the long-term prospects for the sector remain strong, while the stock has priced in quite a few of the short-term negatives. We would be inclined to add to our positions here, given:Falling oil prices  have led to lower volume growth assumptions owing to the sliding competitiveness of natural gas vs other fuels......However, ENN's valuations now appear reasonable vs historic levels since over the past few months the stock has not only suffered from EPS cuts but also multiple de-rating In addition, volume growth forecast for ENN still remains the best amongst peers. C/I make up the bulk of its customers for gas sales and they remain the most price sensitiveWith NDRC recently undertaking the first cut in natural gas prices since the past 15 years, a recent change in stance, this will go a long way to revive volume growth and it portends towards more price rationalization to come which should revive volume growthThe longer term sector growth is likely to remain strong with the government intent on raising  the share of natural gas in the energy mix to 10% by 2020 from the current 5%In addition, changing regional dynamics (Russia delivering gas to China, Japan switching on Nuclear plants) augur well for incremental supply of gas to China

ENN Energy (2688 HK) - Measures to rationalize natural gas price will lead to volume growth revival

China

ENN Energy Holdings Ltd. distributes natural gas in China.  The Company, through its subsidiaries, invests in, operates, and manages gas pipelines, and sells and distributes piped and bottled gas in China.

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ENN Energy (2688 HK)

Why the Renewable Energy Boom Has Legs

The drive to green power is the well-understood destructive impact of fossil fuel consumption:Investment in renewable energy is driven by the...

Morningstar, Inc.

ENN Energy (2688 HK) - Measures to rationalize natural gas price will lead to volume growth revival

As a part of our Long-term leaders vertical, we look at Enn Energy (ENN) which has had a tumultuous few months and still remains 23% below its...

Sumeet Singh

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