Daily Brief Utilities: Atco Ltd/Canada, CLP and more

• ATCO is being split – its controlling Canadian Utilities (CU) stake goes to Emera (EMA) in an all-share merger, and the non-utility businesses are spun out as “New ATCO.”
• Per ATCO share, holders receive 0.865 Emera shares plus one New ATCO share.
• In our view, the value unlock sits in New ATCO, which management argues has been hidden behind the CU stake

• CLP Holdings Limited (2 HK) provides institutional investors with a premier defensive utility profile in the Asia-Pacific region, underpinned by its quasi-monopolistic Hong Kong electricity business operating under a predictable 15-year Scheme of Control (SoC) framework offering a permitted return on net fixed assets of 8.0% through 2033.
• Following severe earnings degradation in 2022 caused by wholesale energy market volatility and generation outages in Australia, operating performance has staged a robust recovery; earnings normalized to HK$11,742 million in 2024 and HK$10,468 million in 2025, supported by EnergyAustralia contract repricing and disciplined thermal and renewable performance.
• At a current share price of HK$75.50 and offering an annualized dividend yield of approximately 4.21%, CLP combines low-beta defensive cash generation with an expanding zero-carbon asset base across Greater China, though valuation multiples remain balanced against long-term energy transition capex and lingering retail churn in Australia.

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