Utilities Sector

• Hokuriku Electric Power is emerging from a period of significant financial distress, having returned to profitability after substantial losses in FY23. This recovery is primarily driven by adjustments in electricity tariffs and lower fuel procurement costs, though the company’s financial base remains fragile.
• The restart of the Shika Nuclear Power Plant is the single most critical catalyst for the company’s medium-term earnings and financial stability. However, the timeline for restart has been pushed back to at least mid-2026 due to damage sustained during the January 2024 Noto earthquake, introducing significant uncertainty.
• Valuation appears attractive, with the company trading at a significant discount to book value and on a low forward P/E ratio. However, this discount reflects the substantial risks associated with its nuclear operations, high debt levels, and the volatile nature of the Japanese power market.

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• Dominion Energy is accelerating into one of the most consequential growth phases in its history, with data centerdriven load growth, multibillion dollar transmission expansions, and the 2.6 gigawatt Coastal Virginia Offshore Wind (CVOW) project advancing toward first power in early 2026.
• Now, reports indicate that Dominion is exploring a potential acquisition of Northern Virginia Electric Cooperative (NOVEC), a move that would deepen its footprint in the world’s busiest data center corridor—Loudoun County’s “Data Center Alley.” The timing is notable: Dominion disclosed that contracted and in process data center demand has surged to roughly 47 gigawatts, up 17% since year end 2024, while the company simultaneously works through major regulatory, financing, and construction milestones across its portfolio.
• Dominion and NOVEC already share deeply interconnected transmission infrastructure, and NOVEC’s customer mix—where data centers account for roughly two thirds of electricity sales—aligns with Dominion’s strategy to serve rapidly rising AI related load.

• Naturgy’s float now stands at 18.6% with re-inclusion into a major index confirmed; €150–250M in tracker flows expected by Feb 2026.
• Liquidity metrics now well above thresholds, with September ADTV at €15.2M, ensuring long-term compliance.
• Passive inflows of €150–250M expected by February 2026; increased ETF demand may tighten spreads, raise visibility, and shift borrow dynamics as short availability potentially declines.

• Atmos Energy Corporation reported a strong fiscal 2025 performance, achieving a diluted earnings per share (EPS) of $7.46, marking the 23rd consecutive year of EPS growth and the 41st consecutive year of dividend growth.
• The company’s results signify successful execution of its strategy focusing on modernization and reliability of its natural gas systems, coupled with a commitment to safety and service expansion.
• Positive outcomes of the fiscal year include substantial customer growth, with approximately 57,000 new residential customers and expansions in the commercial and industrial sectors, suggesting increased demand and confidence in natural gas as a key energy source.

• Essential Utilities, Inc. has presented a transformative quarter, marked by a notable 32% growth in earnings per share year-over-year and several strategic undertakings.
• A key highlight is the merger with American Water, expected to significantly enhance the company’s footprint, serving over 5 million connections across 17 states and strengthening its position as a premier water and wastewater utility firm.
• This merger is anticipated to deliver synergies and present a robust investment case with projected growth rates in earnings per share and dividends of 7% to 9%, propelled by ongoing infrastructure investments.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: ReNew Energy, China Jinmao
• UST yields fell on Friday, led by the front end, after New York Fed President John Williams said he saw room for another rate cut in the near term, amid a softening labour market.
• The yield on the 2Y UST declined 6 bps to 3.53%, while that on the 10Y UST dropped 5 bps to 4.09%. Equities recovered on Friday, but remained down for the week. The S&P 500 and Nasdaq rose 1.0% and 0.9% to 6,603 and 22,273, respectively.
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• Diversified Pure-Play Infrastructure Leader: Brookfield Infrastructure Partners (BIP) is one of the largest publicly traded, globally diversified owners and operators of critical infrastructure networks across utilities, transport, midstream, and data sectors. This diversification provides resilience and exposure to various macroeconomic tailwinds.
• Proven Value Creation Model: BIP employs a disciplined, value-oriented investment strategy focused on acquiring high-quality assets, enhancing their performance through operational expertise, and opportunistically recycling capital from mature assets into higher-growth opportunities. The company targets a 12-15% total return on its investments.
• Commitment to Shareholder Returns: The partnership has a strong track record of delivering long-term growth in Funds From Operations (FFO) per unit and aims for annual distribution growth of 5-9%. This focus on sustainable and growing distributions is a cornerstone of its value proposition for institutional investors.

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• Eversource Energy reported its third-quarter 2025 financial results, evidencing both strategic progress and challenges.
• The company’s GAAP earnings for the quarter were $0.99 per share, factoring in a significant nonrecurring charge of $75 million related to its offshore wind liability, offset by tax benefits.
• Excluding this charge, non-GAAP earnings were $1.19 per share, up from $1.13 the prior year, mostly driven by infrastructure investments and strategic rate increases across various segments, including natural gas and electric distribution.

• Fortis Inc.’s third-quarter 2025 earnings call highlights a structured approach towards achieving regulated growth, complemented by strategic asset sales to refine their investment profile.
• The recent divestiture of Fortis Turks and Caicos (FortisTCI) and investments in Belize underscore a transition to 100% regulated assets, which aims at streamlining the company’s operational framework towards reducing risk and volatility.
• Operational efficiency remains a core tenet of Fortis’s strategy.

• Exelon Corporation reported notable financial and operational outcomes for the third quarter of 2025, achieving earnings of $0.86 per share, an increase from $0.71 in the previous year’s third quarter.
• This performance exceeds expectations due to warmer weather and favorable storm conditions.
• Despite inflationary pressures and variable interest expenses, Exelon reaffirms its full-year operating earnings guidance between $2.64 and $2.74 per share, aiming to meet or surpass the midpoint of this range.

• Vertically Integrated Geothermal Leader: Ormat is a global leader in the geothermal energy sector, possessing a unique, vertically integrated business model that spans from resource exploration and power plant construction to electricity generation and the sale of equipment. This integration provides significant control over project timelines and costs.
• Strategic Growth in Energy Storage: The company is strategically expanding its Energy Storage segment, which is experiencing rapid growth and helps mitigate the intermittency of other renewable sources. This diversification complements its core, baseload geothermal operations and taps into a key growth area of the energy transition.
• Favorable Industry Tailwinds vs. High Valuation: Ormat is well-positioned to benefit from the global push for reliable, carbon-free energy. However, its shares trade at a premium valuation, and the company’s capital-intensive growth strategy has resulted in consistently negative free cash flow, a key consideration for investors.

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• The latest financial results for ONE Gas, Inc. offer a multifaceted view of the company’s performance and strategic direction.
• Both positive and negative aspects provide a comprehensive look at the company’s prospects.
• From the earnings call, ONE Gas revised its earnings per share (EPS) guidance for the year 2025, setting a forecasted range between $4.34 and $4.40.

• Public Service Enterprise Group (PSEG) delivered a solid financial performance in the third quarter of 2025, showcasing both resilience and strategic progression.
• The company reported net income of $1.24 per share, an increase from $1.04 in the same period last year, and non-GAAP operating earnings of $1.13 per share, compared with $0.90 per share in 2024.
• The improved performance was notably driven by the impact of the October 2024 electric and gas base distribution rate increase, which enabled PSE&G to recover returns on prior capital investments exceeding $3 billion.

Rubis announced that it has been issued a total fine of €65m by the French Competition Authority for anticompetitive practices in the supply, storage and distribution of petroleum products in Corsica during 2016 to 2022. The company denies violating the competition law and plans to appeal the decision.

• Equatorial Energia is a key player in the Brazilian electricity sector, distinguished by its proven expertise in acquiring and turning around underperforming distribution assets, driving operational efficiency and growth.
• The company is pursuing a multi-utility strategy, diversifying from its core electricity distribution business into renewable generation, transmission, and sanitation, creating new avenues for growth and value creation.
• Key challenges include navigating Brazil’s complex regulatory environment, managing high leverage from its acquisitive strategy, and addressing execution risks associated with integrating new assets and ventures in different sectors.

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• SG Mart is rapidly expanding its B2B marketplace for building materials, primarily focusing on steel, with an aggressive growth strategy aiming to capture a significant share of the large and fragmented Indian market.
• The company benefits from the strong backing of the APL Apollo Group, providing it with industry relationships, funding, and brand leverage for its B2C distribution.
• Key risks include the highly competitive nature of the steel trading industry, which operates on thin margins, and the volatility of steel prices, which can impact profitability.

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• Existential Threat from Wildfire Litigation: The company faces monumental challenges following the August 2023 Maui wildfires. A global settlement has been reached in principle, with HEI’s portion being approximately $1.99 billion to resolve tort claims. While this provides a path forward, the financial overhang is severe and will require significant financing, pressuring the balance sheet for years.
• Operational and Financial Restructuring: In response to the crisis, HEI has suspended its dividend, sold non-core assets, and is intensely focused on wildfire mitigation and grid hardening, with a planned investment of $400 million from 2025-2027. Credit rating agencies have downgraded the company to below investment grade, reflecting the heightened risk profile, although recent positive legal developments have led to some upgrades and a more stable outlook.
• Regulated Monopoly with a Cloudy Future: As the provider of electricity to 95% of Hawaii’s population, HEI operates as an essential monopoly. However, its future is contingent on navigating the settlement financing, maintaining regulatory support from the Hawaii Public Utilities Commission for cost recovery and investments, and successfully executing its wildfire safety strategy to prevent future catastrophes.

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• IDACORP, Inc.’s latest earnings call presented a mixed bag of developments as it navigates growth and energy transition challenges.
• The company reported a positive quarter, with a noticeable increase in its EPS, rising to $2.26 from last year’s $2.12 for the same period, supported by higher retail revenues resulting from a rate change and customer growth, despite experiencing lower usage per customer.
• The year’s first three quarters delivered a cumulative EPS of $5.13 compared to $4.82 in the previous year, driven by a significant increase in additional tax credit amortization.

• CMS Energy has showcased a strong operational, regulatory, and financial performance in its third quarter for 2025, marking it as a period of noteworthy achievements and strategic progress.
• From a regulatory perspective, the company secured favorable outcomes that augment its long-term plans, such as the approval of a Renewable Energy Plan which includes 8 gigawatts of solar and 2.8 gigawatts of wind projects through 2035.
• This aligns well with Michigan’s clean energy regulations and positions CMS Energy favorably within a progressive regulatory environment.

• The Southern Company recently reported strong financial results for the third quarter of 2025, indicating a robust performance from its state-regulated electric and gas utilities.
• The company achieved an adjusted earnings per share (EPS) of $1.60, which surpassed prior estimates by $0.10 and reflected a year-over-year increase of $0.17.
• This positive performance was driven by strategic investments in regulated utilities, vigorous customer growth, and increased usage, despite being partially offset by milder weather, higher depreciation and amortization, and elevated interest costs.