Utilities Sector

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents, adjusted every year in August.
• We look at the rankings of the potential ADDs/DELs every month for the next rebal, based on most recent trading data. 
• Every month we provide trade suggestions. The last three months have seen market-neutral returns of +3.0%, +6.5%, +3.2% respectively for the one-month periods. A new trade is suggested below.

• TLNE announced the sale of three power plants in Texas for a higher figure than we were expecting. TLNE is selling 1.7GW of power in Texas for $785 million
• The Texas power plants decrease TLNE’s footprint to thirteen sites and a total of 10.7 GW owned capacity.
• After the Texas assets are sold TLNE would have thirteen power plants mostly in Pennsylvania with several across other states. Three of which are minority ownerships.

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND a net buyer every day since the end of Chinese New Year. Still. NORTHBOUND a huge net seller this week, but net buyers in size (RMB +86bn) over 8wks.
• For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

• With acceptances from 99.6%, settlement of the offer for Opdenergy Holdings (OPDE SM)  will happen on 26 March and squeeze-out on 15 April.
• A done deal since outset, at a fair price. The agreement of Anti with the top shareholders left minorities with virtually no capacity to ask for a sweetening. 
• Readacross: Ecoener, Grenergy, Audax, Solaria could all be the object of takeover bids (either from private equity or minority buyouts), with Grenergy preferred. See comparables table in the insight.

ACWA Power achieved record results for FY23 (year end 31 December 2023). Net profit attributed to equity shareholders stood at SAR1,662m, up 8% y-o-y, while operating income of SAR2,984m grew 14% y-o-y. ACWA added 10.7GW of power generation capacity to its portfolio throughout 2023, with 66% exclusively renewable energy. The company achieved a record 12 financial closes in FY23, with a total funding raise of approximately SAR60bn. It continues to progress its growth ambition of tripling its assets under management by 2030, sufficiently supported by long-term financing and funding facilities.

• KKR offers €17.50/share for Encavis AG (ECV GR), 53% premium, implied equity value of €2,818 million. This shows interest in renewables after the falls on the stock market in 2023-24.
• The offer represents 12.7x EV/Fwd NTM EBITDA and 32.4x Fwd P/E. On  a P/E basis, the offer seems fair vs. (depressed) comparables.
• Given the current negative perception surrounding renewable energy companies, I think the shareholders are likely to tender at an attractive price. Spread is 3.77%/5.24% (gross/anualised, assuming closing by mid-December).

• TLNE reported fourth quarter results impacted by two unplanned maintenance issues and yet managed to report operating income and adjusted EBITDA for the period.
• TLNE reported revenue of $527 million in the quarter compared to our forecast of $507 million. Energy related revenue dropped in the quarter due to two maintenance issues and seasonality.
• TLNE’s stock has started to inch closer to our original target of $96, but we believe there is upside from there if TLNE is valued closer to other nuclear peers.

• A&D Holon Holdings is a Japanese precision instrument company specializing in industrial measuring, medical equipment, and semiconductor production
• The company’s semiconductor division is driving high growth and profitability, with expected earnings growth of around 50% over the next two years
• Despite strong prospects, A&D Holon Holdings is significantly undervalued, trading at low multiples on FY Mar-2024 estimates

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China South City
• Greenko Energy Holdings
• Road King Infrastructure

• China Longyuan Power (916 HK) should see a mean reversion of its valuations. It has rebounded 36% from the the 2024 trough, but has only gone up 0.3% YTD.
• There are three catalysts in place to drive the move: acceleration in power generation, cash flow improvement, and recovery in the wind power market.
• Its P/B is at a 40% discount to average, and a return to such level will generate a 60% upside. Even after reversion, its PER of 7.8x is not stretched.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Pertamina Geothermal Energy PT
• Sunny Optical Technology Group
• West China Cement
• Yuexiu Property

• Iberdrola SA (IBE SM) launches a $34.25/share cash offer to acquire the minorities (18.4%) in its US subsidiary Avangrid (AGR US). Premium is 6.8%, and the cost c. $2.5 billion.
• The market was awaiting this move since the cancellation of the PNM deal, which explains the recent rise in the share price of Avangrid.
• Gross spread is 4.5%. It seems investors are buying in the hope of an offer sweetening, knowing that Iberdrola has some cash available to spend from the profitable Mexico exit.

• The GoI is looking to raise up to US$248m from selling its stake in Neyveli Lignite (NLC IN).
• This seems to be part of the GoI’s ongoing divestment drive across PSUs, with the recent selldowns in other PSUs having done well. 
• The GoI had also sold some stake in the firm earlier in Oct 2017. 

• Gigacloud Technology is a B2B ecommerce company connecting manufacturers in Southeast Asia with retailers in the US, Japan, and Western Europe
• Recent short attack from Culper Research debunked by independent review by the Board
• Transitioning to become a fully US-based public company and has acquired Noble House LLC at an attractive price, with stock expected to appreciate by 78% to $23.72 by the end of 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Green Energy

• China Power International (2380 HK)‘s Jan power sales showed a sharp 41.2% YoY growth. More importantly, this marks sustaining a solid MoM trend in the last few months. 
• Recovery of the hydropower generation is encouraging as this was a drag last year. Meanwhile, higher coal-fired generation will capture the better profitability of this segment.
• CPI’s strongest earnings CAGR in the sector has made its earnings multiples increasingly cheap over the next two years. After +15.7% YTD in its share price, there is further upside.