Daily Brief Utilities: APA Group, China Oil And Gas and more

• APA Group (APA AU) is looking to raise A$675m (US$430m) in its primary follow-on to partially fund its acquisition of the Alinta Energy assets in the Pilbara region.
• The deal is a well flagged one with APA having been one of the last remaining bidders on the asset. Short interest has been on the rise as well.
• However, the deal doesn’t seem accretive at our end, and the results reported today seemed to have missed analyst expectations.

The H1/23 results of China Oil and Gas (COG) were broadly in line with our expectations. The credit profile remains satisfactory, supported by a decrease in borrowings. We view positively management’s goal of reducing long-term debt.

Overall, the operating environment was favourable as expected. That said, there was a dip in residential sales vis-a-vis H1/22, given unusually high sales in 2022 due to COVID lockdowns. According to the company, volume growth was 15% y-o-y in January and February 2023.

COG is keen to reduce financing costs and extend its maturity profile by refinancing the USD 290 mn syndicated loan that falls due on December 31st. The company is in discussions with banks and is planning to launch a new syndicated loan to take out the USD 290 mn. The new syndicated loan is likely to be priced at a similar level as the existing facility.