Daily Brief Utilities: Alupar, An Hui Wenergy Co Ltd A, Aygaz AS, Black Hills, China Water Affairs Group, Cikarang Listrindo, Companhia de Saneamento do Parana – Sanepar, Concord New Energy, Consolidated Water Co Ltd., Admie Holding and more

• Alupar is a key player in the Latin American energy sector, with a primary focus on the stable and predictable electricity transmission segment, which accounts for approximately 80% of its EBITDA.
• The company’s growth is underpinned by a robust pipeline of new transmission projects in Brazil, Peru, Chile, and Colombia, which are expected to significantly increase revenues as they become operational through 2029.
• While the regulated nature of its transmission contracts provides revenue stability, Alupar faces risks related to project execution, regulatory changes, and macroeconomic factors such as interest rate and currency fluctuations in the regions it operates.

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• An Hui Wenergy is a provincial power utility with a diversified generation portfolio, showing a strong recovery in profitability and exceptional dividend growth, driven by improved margins.
• The company is actively expanding its clean energy portfolio, including wind, solar, and nuclear power, aligning with China’s national ‘double carbon’ strategic goals and the energy transition policies of Anhui province.
• Despite recent revenue stagnation and historically negative free cash flow, the company’s valuation appears attractive compared to peers, and its strong dividend yield presents a compelling case for income-focused investors.

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• Dominant Market Leader: Aygaz is the undisputed leader in the Turkish LPG market, commanding significant market shares in the cylinder gas (41.6%) and autogas (23.3%) segments. Its brand is synonymous with LPG in Turkey, supported by an extensive distribution network of over 4,000 dealers and significant logistical infrastructure.
• Strong Financial Performance and Shareholder Returns: The company has demonstrated a robust growth track record with a 5-year revenue CAGR of 54.62%. It maintains a strong balance sheet and has a consistent history of paying dividends, reflecting its financial health and commitment to shareholder value.
• Strategic Growth Initiatives: Management is focused on strengthening its domestic leadership while expanding internationally, notably through its joint venture in the high-growth Bangladesh market. Aygaz is also exploring opportunities in adjacent businesses with a focus on sustainability and energy transition, indicating a forward-looking strategy.

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• Black Hills is a regulated utility with a stable, monopolistic business model across eight states, providing a foundation for consistent earnings and a long history of dividend growth.
• Significant growth is anticipated from a $4.7 billion, five-year capital investment plan focused on system modernization and reliability, which is expected to expand the company’s rate base and drive earnings.
• A key emerging catalyst is the servicing of large-scale data centers in its Wyoming territory, with a pipeline exceeding 3 gigawatts, which could contribute over 10% of consolidated EPS starting in 2028 with minimal initial capital outlay.

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• China Water Affairs Group is a leading integrated water utility operator in China, with its core business in city water supply and sewage treatment providing stable, recurring revenue through government-granted concessions.
• The company is facing near-term headwinds from a slowdown in China’s property market, which has reduced high-margin connection fee income, and delays in tariff adjustments, leading to a recent decline in revenue and profitability.
• Future growth is expected to be driven by government-mandated tariff reforms, expansion into the high-potential pipeline direct drinking water segment, and a strategic focus on cost control and reducing capital expenditures to improve cash flow and deleverage.

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• Dominant Power Provider in Key Industrial Hubs: Cikarang Listrindo is the longest-operating independent power producer (IPP) in Indonesia, holding a captive position as the electricity supplier to five major industrial estates in the Cikarang and Bekasi regions. This provides a stable and diversified customer base of over 2,600 industrial clients, including major multinational corporations in various sectors.
• Attractive Shareholder Returns Profile: The company is characterized by a very high dividend yield, consistently above 10%, supported by stable cash flows from its long-term customer relationships. Valuation multiples such as P/E and P/B are low relative to its stable earnings profile, suggesting an attractive value proposition for investors.
• Navigating the Energy Transition: While currently reliant on gas and coal for the majority of its 1,144 MW capacity, the company is actively integrating renewable energy. It has made initial investments in rooftop solar and biomass co-firing, positioning itself to support the growing demand for clean energy from its industrial clientele and align with Indonesia’s broader energy transition goals.

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• Sanepar operates as a natural monopoly in the state of Paraná, providing essential water and sanitation services, which ensures stable and predictable revenue streams.
• The company is poised to benefit from Brazil’s New Sanitation Legal Framework, which mandates universal service coverage by 2033, creating significant long-term investment and growth opportunities.
• As a state-controlled entity, Sanepar is subject to regulatory and political risks, particularly concerning tariff adjustments and potential government interference, which can impact profitability and investment plans.

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• Concord New Energy is strategically expanding its renewable energy portfolio with a focus on wind and solar power, complemented by a growing presence in energy storage solutions. The company is actively pursuing global expansion, particularly in North America and Europe, to capitalize on the increasing demand for clean energy.
• The company has a strong commitment to sustainable practices and corporate governance, which is reflected in its high ESG ratings. This focus on sustainability is integral to its long-term value creation strategy and helps in attracting investment and building trust with stakeholders.
• Despite a challenging market environment that has impacted recent financial performance, Concord New Energy is focused on long-term growth through technological advancement, green power trading, and sustainable financing. The company’s integrated business model, which includes design, construction, and operation of power plants, provides a competitive advantage.

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• Consolidated Water holds a unique position as a specialized water solutions provider, benefiting from long-term, exclusive contracts in water-scarce Caribbean nations, which provide stable, recurring revenue.
• The company is poised for significant growth driven by its expansion into the U.S. market, highlighted by a major $204 million desalination project in Hawaii, and a strategic focus on its higher-margin services and manufacturing segments.
• Key risks to the outlook include the ongoing renegotiation of its critical and highly profitable retail license in the Cayman Islands and significant, delinquent receivables from its single government customer in the Bahamas.

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• Pure-Play Regulated Utility Asset: Admie Holding provides unique exposure to the Greek electricity transmission network, a natural monopoly, through its 51% controlling stake in the Independent Power Transmission Operator (IPTO S.A.). This structure offers investors stable, regulated, and predictable returns.
• Central Role in Energy Transition: IPTO is critical to Greece’s energy transition, tasked with significant grid expansion and modernization to integrate renewable energy sources and enhance regional interconnectivity. This translates into a multi-billion Euro, long-term capital expenditure program, which is the primary driver for growth in the company’s regulated asset base (RAB) and, consequently, its earnings and dividend capacity.
• Attractive Dividend Profile: The company exhibits a strong commitment to shareholder returns, characterized by a high dividend yield and a remarkable dividend growth track record. The regulated nature of the underlying business provides high visibility on future cash flows, supporting a sustainable and potentially growing dividend stream.

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