Utilities Sector

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
• We expect one change for the HSCEI index in March 2025 and capping flows of US$136mn one-way.

• JSW Energy faces a significant regulatory setback with the rejection of its proposed tariff for a 500 MW/1000 MWh Battery Energy Storage System project by the Central Electricity Regulatory Commission. 
• This decision highlights the vulnerability of renewable energy ventures to regulatory changes, potentially leading to project delays, tariff renegotiations, and broader market uncertainty, which could impact India’s renewable energy goals.
• The impact of this could be multiple ripple effects including project delays, financial loss, viability concerns of battery storage business.

• PPL Corporation reported its third-quarter 2024 financial results, showing a mixed performance amid ongoing operational initiatives and strategic planning.
• The company posted GAAP earnings of $0.29 per share, slightly down from $0.31 per share in the same quarter of the previous year.
• Adjusted for special items, earnings from ongoing operations were $0.42 per share, a decrease of $0.01 compared to the third quarter of 2023.

• Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
• Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book. 
• There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.

• In a move that could significantly impact the solar power industry, TPG Rise Climate, the climate-focused investment arm of buyout firm TPG, is reportedly in advanced talks to acquire Altus Power (AMPS).
• Altus Power, a leader in commercial-scale solar solutions, has made substantial strides in delivering clean energy to commercial property owners and residential customers across the U.S. With over 1 gigawatt of operating solar assets, the company has become a cornerstone in the renewable energy sector, leveraging its robust portfolio to generate consistent revenue and optimize asset performance.
• This potential acquisition comes at a pivotal moment as TPG looks to expand its climate-focused investments and capitalize on the growing demand for clean energy solutions.

• Shandong Hi-Speed Holdings Gro (412 HK) completed the acquisition of CITIC Securities 13.52% stake in Shandong Hi-Speed New Energy G (1250 HK) at HK$1.78 per share. 
• SPA completion triggers a mandatory unconditional offer at HK$1.78 per share. The composite document will be sent, and the offer will open by 28 January. 
• At the last close and for an early February payment, the gross and annualised spread of the offer is 2.9% and 30.2%, respectively.

• Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
• There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
• With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

• Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
• The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
• The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing. 

• Adani Transmission (ADANIT IN) is one of the largest private player in transmission.
• The management has guided for 20% YOY revenue & EBITDA growth for long term
• Alongside it is trying to diversify from transmission & distribution which are regulated by the government and entered in Smart Meters, Cooling Services etc.

• Aegis Logistics (AGIS IN)  or ALL is an integrated logistics and supply chains provider to the oil, gas, petroleum and chemical players. 
• The company is currently on a capex spree, after joining hands with Royal Vopak to augment its terminals business.
• While the business possesses good cash conversion, one should be bothered by some doubtful accounting with respect to capitalization policy, receivable provisioning, etc which might have beneficial impact on bottom-line.

• The H share market continues to be the top performing market in Asia in 2024.  The HSCEI has outperformed all Asian markets on a USD basis.
• China Longyuan Power (916 HK) was rated a BUY at JP Morgan with the company hosting a roadshow to discuss its future growth strategy. 
• China Resources Beverage (2460 HK) was initiated as a BUY at CMB International as the company rapidly expands into the ready-to-drink category with teas and sports drinks.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
• At present, we see one change based on the 13th December 2024 data but the rankings can change until 31st December 2024.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: ReNew Energy
• In the US, inflation data was benign and supported expectations for a Fed interest rate cut this month. The CPI inflation came in at 2.7% y-o-y in November (2.7% e / 2.6% p), while the core CPI inflation stood at 3.3% (3.3% e / 3.3% p).
• US Treasury sold off across the curve, with the yields gaining 4-6 bps. The S&P 500 and Nasdaq gained 0.8% and 1.8%, respectively.

• Northvolt was once seen as Europe’s battery champion but faced challenges with management, safety standards, reliance on foreign machinery, and misuse of capital
• Northvolt filed for bankruptcy after facing issues with production output, leading to job cuts and a strategic review to restructure the company. Investors like Goldman Sachs wrote down their investments in Northvolt to zero, raising questions about the future of battery making in Europe.
• Investors like Goldman Sachs wrote down the value of their Northvolt investments to zero.

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• Aegis Logistics is India’s leading logistics player in Liquified Petroleum Gas (LPG/Propane) and Chemicals.
• It has demonstrated a stellar track record over past decade, delivering a 25% CAGR in EBITDA and Net profit, along with a 28% CAGR in dividend payouts.
• Given the strength of its partnership with Vopak and various capital expenditure lined up in medium term, it should continue to deliver robust operational and financial performance.