Utilities Sector

• Dalrymple Finance report examines financial structure of Brookfield Infrastructure Partners managed by Brookfield Asset Management
• Report raises concerns about fee maximization practices that may not align with interests of limited partners
• Comparison with sister entity launched in 2023 highlights flaws in BIP’s financial policies, suggesting a unsustainable pyramid scheme structure

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.

• American Water started 2023 with promising financial results, as its earnings per share (EPS) rose from $0.91 to $0.95 compared to the same quarter last year.
• This increase was anticipated, aligning with the company’s forecast and sustaining its full-year earnings guidance.
• Noteworthy contributing factors include the $0.02 per share rise stemming from additional interest income, linked to amendments in the seller note related to the HOS sale.

• Entergy Corporation has shown a mix of achievements and challenges in its First Quarter 2024 results.
• Although the company reported adjusted earnings per share of $1.08, which fell below expectations, its management remains optimistic about meeting annual financial goals citing a solid track record in managing operational expenses.
• Several positive developments were noted, including recognition for customer engagement and the execution of eight electric service agreements with industrial customers.

• Dominion Energy delivered mixed results in the first quarter of 2024, showcasing both resilience and areas needing improvement as it strives to meet its future financial and operational goals.
• The company reported first quarter operating earnings of $0.55 per share, affected by a $0.06 headwind from adverse weather conditions.
• However, the sale of East Ohio Gas Company and various operational management (O&M) timings provided some financial relief.

• Sempra’s first quarter of 2024 results showcases a strong start to the year, affirming its robust financial health and diligent strategic execution across its various segments.
• This report, reflecting on certain financial and strategic developments, delves into both the achievements and the areas of persistent challenge within the company, thereby providing a comprehensive overview for potential investors.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Xcel Energy recently held a discussion regarding their first quarter earnings for 2024, where they announced an increased earnings per share compared to the prior year.
• During the quarter, the company experienced various operational challenges and opportunities, extensively detailed in their public statements.
• Xcel Energy continues to emphasize its commitment towards enhancing system resiliency, particularly against wildfire risks, and advancing its clean energy initiatives.

• Public Service Enterprise Group reported its first-quarter earnings for 2024, showcasing results that align closely with its annual fiscal projections.
• The organization aims to maintain its non-GAAP operating earnings guidance of $3.60 to $3.70 per share and anticipates a growth rate between 5% to 7% through 2028.
• This growth is premised on sizable infrastructure and energy efficiency investments designed to support the electrification of various sectors and a move towards reduced greenhouse gas emissions.

• Duke Energy has delivered robust first-quarter 2024 results, underpinned by various strategic implementations and operational efficiencies.
• With a first-quarter adjusted earnings per share of $1.44, the company outperformed its previous year’s results by $0.24.
• This financial improvement is primarily attributed to growth from rate reforms across various jurisdictions, increased retail volumes, and favorable weather conditions.

• CenterPoint Energy has published its first-quarter results for 2024, showing significant resilience and strategic maneuvering despite prevailing challenges.
• The company achieved non-GAAP EPS of $0.55, successfully earning over one-third of its full-year earnings projection at the midpoint.
• This result underscores its projected annual EPS growth of 8%, aligning with its strategic plan to bolster shareholder value consistently.

• DTE Energy presented its first quarter 2024 financial results, showing a robust start to the year.
• The energy company, well-entrenched with a solid foundation, reported operating earnings of $346 million, translating to $1.67 per share.
• Despite facing milder winter weather which affected demand, DTE Energy demonstrated financial resilience.

• Intouch Holdings (INTUCH TB) and Gulf Energy Development (GULF TB) announced restructuring transactions to merge into NewCo and VTOs for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB). 
• Shareholders will receive 1.69335 NewCo shares per Intouch share (excluding shares held by Gulf) and 1.02974 NewCo shares per Gulf share.
• The key conditions are shareholder approvals, completion of VTOs and purchase of dissenting shares. The transaction is long-dated and expected to be completed in 2Q25.

• CK Infrastructure Holdings (1038 HK), 75.67%-held by CK Hutchison Holdings (1 HK), announced it is considering a second listing on an overseas stock exchange, such as London.
• A UK-listing makes perfect sense. In excess of 90% of CKI’s FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.
• The wording in the announcement is unclear – a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.

• Barito Pacific (BRPT IJ)‘s 64.7% stake in Barito Renewables Energy (BREN IJ) (now Indonesia’s largest company by market cap), is worth 8x its market cap. That’s unsustainable.
• Preceding my comments on the Barito complex are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

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 Water Affairs
• Health And Happiness (H&H)

• TLNE has come under pressure after news of AEP and EXC protesting the power purchase agreement between TLNE and AWS. AEP and EXC are asking for a hearing by FERC
• The process creates a headwind for TLNE and the timing of when, or if, the remaining $300M would be released in TLNE’s agreement with AWS.  
• The signal AEP and EXC are sending supports the long-term view on power supply. The power being diverted to AWS would put greater stress on the regulated power companies

• On June 24, a share purchase agreement was signed between Brookfield and several shareholders, to acquire 53.12% of Neoen’s outstanding shares at €39.85/share. Brookfield has also received irrevocables for 4.36%.
• The offer price is generous and this looks a done deal. Spread 5.19%/7.29% (gross/annualised) seems interesting in spite of the longer approval process in energy deals.
• The convertible NEOEN 2.875 14-SEP-2027 has a balanced profile. It is trading at (mid) 100.75 (vs. €37.82), vs. a fair price estimate of 113.773.

• China Gas Holdings (384 HK)‘s FY24 result is distorted by non-recurring items and provisions. Adjusted net profit, however, has declined by only 4.3%, and is only 2.6% below consensus. 
• FY25 guidance looks positive as a 6% increase in dollar margin and a 5% increase in gas volume are expected. The Apr-May operating figures support such projections.
• China Gas maintained its DPS despite a drop in reported profit, showcasing its confidence. Assuming the same dividend in FY25 and FY26, it will sit on a yield of 7%. 

• Spruce Power Holding Corporation (Spruce) is one of the largest third-party owner-operators of residential solar assets.
• The company is not an installer of solar assets and instead grows through the acquisition of mature portfolios of residential solar assets and contracts.
• Spruce’s portfolio consists of residential solar power purchase agreements (PPAs) and solar lease agreements (SLAs) and has grown at a 29% CAGR since 2018, reaching 75,000 home solar assets and contracts. 

The attractiveness of Telecom Plus’s (TEP’s) bundled utility proposition underpins the progress made in FY24, with record profits and customer numbers. The normalisation of energy prices in the year was offset by growing non-energy prices, while the growth in the customer base to over one million clients helped to boost profits. Management expects to deliver 10–15% growth in net customers in the medium term and is confident in the outlook.

• Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
• The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
• Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.

• Pathward Financial, Inc. is a BaaS company that partners with prepaid card issuers to provide prepaid card services to consumers and businesses
• Prepaid cards are used for various purposes such as fintech apps, payroll, gift cards, or rebates, with Pathward acting as the banking sponsor for these programs
• Pathward earns revenue through collecting deposits, investing in higher-yielding assets, and earning revenue from payments such as interchange fees, with impressive financial metrics including an adjusted NIM of 4.5% and ROTE of 30%

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 Jinmao Holdings
• ENN Energy
• ENN Natural Gas
• MGM China Holdings