Utilities Sector

• The deal has now got green light from the SEC, FERC, Maine Public Utilities Commission, and seal of approval from ISS and Glass Lewis.
• Pending are the approval of the New York Public Service Commission and shareholder approval (GM on September 26, which should just be a formality).
• Spread is 0.46%/3.48% (gross/annualised) based on the closing share price of September 18 and assuming both a prorated dividend of $0.1467 and settlement on November 8. Long and tender.

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
• Meituan

• TLN held an investor day where its management laid out the free cash flow the Company should generate over the next two years and how it was going to happen.   
• TLN is projecting adjusted EBITDA that makes our estimate look very conservative.    TLN is forecasting 2025 adjusted EBITDA of $926 million to $1.175 billion. 
• The expected free cash flow over the next two years is powering TLN to raise their stock buyback program by $1.1 billion.

• Entergy Corporation’s recent earnings underlines several pivotal strides and challenges that it contemplates in its operations and strategic developments.
• In the financial domain, Entergy reported a robust quarterly adjusted earnings per share (EPS) of $1.92, reflective of the company’s strategic initiatives and operational efficiency, placing it securely on track to meet its 2024 guidance.
• The financial stability is further underscored by the utility’s meticulous handling of pension liabilities, characterized by a lift-out strategy that has led to the pension plan being 96% funded, reducing financial risk and volatility.

• WEC Energy Group’s latest quarterly earnings call detailed the company’s financial performance for the second quarter of 2024.
• The report presents a mixed picture, showcasing robust strategic operations and investments, accompanied by financial nuances inherent to operational challenges, regulation, and planned advancements.
• Positively, WEC Energy Group reported earnings of $0.67 per share for the second quarter and reasserted its full-year earnings guidance range of $4.80 to $4.90 per share, assuming typical weather conditions for the remainder of the year.

• NRG Energy, Inc. delivered a robust financial performance for the second quarter of 2024, marked by significant growth in earnings and aggressive strategic pursuits aimed at capitalizing on current market dynamics.
• The company reported an Adjusted EBITDA of $935 million, a 14% increase year-over-year, and is trending toward the upper end of its financial guidance for the year.
• 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.

• Sempra reported a robust financial performance for the second quarter of 2024, with several operational and strategic highlights Standing firmly on its commitment to safety, reliability, and advancing decarbonization efforts, Sempra is actively navigating the evolving energy landscape.
• California operations under Sempra continue to support the state’s objectives around safety and decarbonization.
• Significant advancements include participation in decarbonization initiatives and developments around hydrogen hubs which are aligned with California’s far-reaching climate goals.

• Public Service Enterprise Group (PSEG) recently disclosed its second-quarter 2024 earnings, revealing a nuanced performance marked by both challenges and sustained strategic growth.
• The company reported a net income of $0.87 per share for this quarter, which marks a decrease from last year’s figures of $1.18 per share.
• The non-GAAP operating earnings stood at $0.63 per share, slightly below the previous year’s $0.70 per share.

• UGI Corporation reported improved financial results for the fiscal third quarter of 2024, reflecting progress in executing strategic priorities such as enhancing cost efficiencies, strengthening the balance sheet, and optimizing its portfolio.
• Adjusted earnings per share (EPS) for the quarter rose to $0.06 from $0.00 in the previous year.
• The company’s focus on sustainable cost savings and critical financing transactions bolstered their financial standing, with available liquidity by quarter-end reported at $1.9 billion.

• Ormat Technologies’ second-quarter earnings for 2024 demonstrated significant financial growth and solid operational performance across all its segments.
• The company reported a 9.3% increase in total revenues, which amounted to $213 million.
• This revenue growth was driven primarily by the Electricity segment, attributed to asset acquisitions and improvements at specific facilities.

• Eversource Energy has made substantial progress in its strategic realignment towards its core utility operations, as evidenced by its latest earnings call.
• The company’s decision to sell its offshore wind projects, Sunrise Wind, South Fork, and Revolution Wind, underscores its intent to focus on strengthening its regulated utility business.
• This divestiture allows Eversource Energy to concentrate on enhancing system reliability and facilitating the transition to clean energy, which aligns with regional environmental goals.

• Exelon recently reported its earnings for the second quarter of 2024, with a somewhat mixed yet robust financial and operational outlook, maintaining balance amid challenges and advancements.
• The company declared adjusted operating earnings of $0.47 per share, which surpassed its expectations due to favorable weather and efficient expenditure timings, particularly in ComEd’s distribution revenues.
• This performance, coupled with a stable operational outlay, keeps Exelon on track toward achieving its yearly guidance range of $2.40 to $2.50 per share, with aims of potentially exceeding the midpoint.

• IDACORP, Inc. has reported its financial results for the second quarter of 2024, revealing several key metrics and strategic initiatives that underline both its growth trajectory and challenges.
• In the earnings analysis, several positive and negative factors emerge, influencing an overall assessment of the company’s performance and future outlook.
• 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.

• New Jersey Resources (NJR) reported solid results for the Fiscal 2024 Third Quarter, with business operations aligning with management expectations and the company on track to achieve its fiscal year NFEPS guidance of $2.85 to $3.00 per share.
• The positives articulated in the earnings call included steady growth in New Jersey Natural Gas (NJNG), robust revenue growth in Clean Energy Ventures (CEV), and consistent performance in the Storage and Transportation (S&T) and Energy Services segments.
• 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.

• NiSource, a company that operates in the utilities sector, recently reported its second-quarter 2024 earnings and maintains a focus on delivering reliable and affordable energy, leveraging efficient capital deployment and regulatory mechanisms to provide competitive returns and enhance its balance sheet strength.
• The company reported a second-quarter adjusted earnings per share (EPS) of $0.21 and reaffirmed its guidance for 2024 with adjusted EPS expected to hit the upper half of the $1.70 to $1.74 range.
• NiSource also projects an annual growth of 6% to 8% in adjusted EPS from 2023 to 2028, alongside a rate base growth of 8% to 10%.

• OGE Energy Corp., a prominent provider of electric utility and energy services, has reported a solid performance for the second quarter of 2024.
• The company announced consolidated earnings of $0.51 per share, which includes $0.54 per share from its electric company, OG&E, and a holding company loss of $0.03 per share.
• This performance reflects a significant improvement over the previous year, primarily attributed to strong load growth and favorable weather conditions.

• Pinnacle West Capital Corporation executed commendably in the second quarter of 2024, capitalizing on several strategic advancements and robust operational performances.
• Chairman and CEO, Jeff Guldner, articulated the drivers behind the company’s strong quarterly outcomes, which include the successful integration of new customers and an uptick in sales growth owing to an extreme summer heatwave.
• Phoenix experienced its hottest June on record, significantly affecting energy demand.

• The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
• In this insight, we take a look at Quiddity’s estimation of the latest ranks of potential ADDs and DELs for the upcoming index rebal event in September 2024.
• The rankings will be finalized at the end of this week. Currently, we see one expected ADD/DEL but the expectations can change since there are three more trading days left.

• American Water’s Second Quarter 2024 Earnings Conference Call highlighted a mixed financial performance with several strategic progresses and challenges.
• The company reported a slight decrease in quarterly earnings per share from $1.44 in the previous year to $1.42, maintaining steady performance year-on-year with earnings at $2.37 per share for both the first half of 2024 and 2023.
• Despite this slight dip, the company raised its 2024 earnings per share guidance to $5.25 – $5.30 from the previous range of $5.20 – $5.30, attributing this adjustment to less significant customer usage declines than anticipated.

• CMS Energy, a major energy company based in Michigan, continues to demonstrate resilience and strategic foresight amid regulatory, operational, and market challenges.
• The company’s latest quarterly results indicate a robust execution of its long-standing strategy, combining regulatory maneuvering, aggressive cost management, and substantial investments in system reliability and clean energy transition.
• 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.

• The latest financial performance of Atmos Energy Corporation shows a robust fiscal year, underpinned by significant regulatory outcomes and steady customer growth, evident from the fiscal 2024 third quarter earnings call.
• The company’s performance for the fiscal year up to the third quarter boasted a notable increase in diluted earnings per share, standing at $6 compared to $5.33 in the comparable period from the prior year.
• 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.

• Avangrid’s fourth quarter and full-year 2023 earnings highlighted both the strides and challenges the company faced throughout the year.
• CEO Pedro Azagra Blázquez and CFO Justin Lagasse outlined a strong commitment to clean energy and operational excellence, supported by detailed updates on financial performance, regulatory advancements, and project developments.
• 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.

• Black Hills Corporation’s Q2 2024 earnings call showcased the company’s strategic execution against a backdrop of both challenges and opportunities.
• The utility company, dedicated to improving life with energy, demonstrated strong adherence to customer-focused strategies, underscored by ongoing capital investments, regulatory progress, and growth ventures, particularly in renewable resources and data centers.
• 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.

• Brookfield Renewable Corp., in its second quarter 2024 earnings, showcased a strong performance with record funds from operations, benefitting significantly from advancement in growth and development initiatives.
• CEO Connor Teskey emphasized the company’s strategic capital deployment amounting to nearly $9 billion in development and M&A activities, reflecting robust capacity additions and execution of strategic acquisitions like Neoen, enhancing Brookfield Renewable’s global reach in renewable energy markets.
• 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.

• CenterPoint Energy, during its second quarter of 2024 earnings conference call, presented mixed results along with reaffirmation of its future guidance amidst the challenges posed by Hurricane Beryl.
• The company reported both GAAP and non-GAAP EPS at $0.36 per share and has maintained its full year non-GAAP EPS guidance range of $1.61 to $1.63.
• The company’s leadership emphasized continued growth in the mid- to high-end of their 6% to 8% range annually through 2030 for non-GAAP EPS and dividend per share growth.

• The latest quarterly performance of Constellation Energy Corporation presents a comprehensive view of the company’s current standing and future expectations.
• Revealed during their second quarter earnings call, the company showcased solid achievements across various aspects of its operations, led by President and CEO Joseph Dominguez and CFO Daniel Eggers, alongside their senior management team.
• 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.

• In the second quarter earnings for Dominion Energy, the company reported that its operating earnings stood at $0.65 per share, showing a notable improvement due to better-than-normal weather which contributed an additional $0.03 per share.
• This was complemented by gains from regulated investment growth and contributions from Millstone, benefiting from the absence of extended duration outages and higher realized power prices 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.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Kontrol Technologies recently completed the sale of two subsidiaries for over $24M, allowing it to pay off all of its debt and reach a net cash position of $11.5M.
• KNR plans to reinvest the proceeds into organic growth, tuck-in acquisitions and stock buybacks.
• KNR operates in two secular growth markets, smart building technology and HVAC services, providing a backing for future organic growth.

China Oil & Gas (COG) has reported reasonable H1/24 results. Gross profit and EBITDA weakened slightly, mainly weighed down by lower earnings from residential connections amid the property market downturn. That said, there was slight earnings growth from the other business segments.

Leverage was broadly stable, supported by reduced capex. Liquidity was adequate, as the company drew down on its new USD 315 mn three-year syndicated loan and repaid the bridging facility. COG’s next meaningful debt maturity is in June 2026 (when the USD 300 mn notes will come due). We believe the company has options to address the bond repayment, considering its steady business operations and stable (albeit moderately weak) financial profile.

• China Power International (2380 HK) kicked off FY24 with an impressive 51.5% surge in 1H24 net profit. All business segments improved YoY, with hydropower being the best. 
• Both volume growth and cost reduction are the key drivers, supporting a 7.2pp gross margin expansion. The 5pp increase in the proportion of hydropower sold also lifted profitability.
• CPI will grow its capacity to 52GW by end FY24, a 15.5% YoY and 7.8% HoH increase. Moreover, the upside will come from more asset injection from its parent.