Utilities Sector

• 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

• Infratil Ltd (IFT NZ) aims to raise around US$613m (NZ$1bn) via an institutional placement.
• Proceeds from the placement will be used to fund IFT’s share of capex for its data center arm, CDC.
• In this note, we will talk about the placement and run the deal through our ECM framework.