Spark's Distributions Aren't Immune to Regulatory Attacks

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

The final decisions for Spark's Victorian electricity distribution companies (jointly known as Victoria Power Networks) came in better than we expected, boosting cash flows for the next five years. Given prior comments from management about the potential for distributions to be increased, we think Spark is likely to upgrade its distribution forecasts, given the stronger cash flows under the final regulatory decision.Our main concern is high financial leverage, but the firm could address this by exiting its derivative position in Duet, which would likely pay off Spark‘s corporate level debt. However, exiting the Duet stake would be dilutive to cash flows available for distribution.Analyst: Adrian Atkins

The final decisions for Spark's Victorian electricity distribution companies (jointly known as Victoria Power Networks) came in better than we expected, boosting cash flows for the next five years. Given prior comments from management about the potential for distributions to be increased, we think Spark is likely to upgrade its distribution forecasts, given the stronger cash flows under the final regulatory decision.Our main concern is high financial leverage, but the firm could address this by exiting its derivative position in Duet, which would likely pay off Spark‘s corporate level debt. However, exiting the Duet stake would be dilutive to cash flows available for distribution.Analyst: Adrian Atkins 

Final Decision for Spark Drives Increase in Fair Value Estimate; Looking Reasonable Value

Spark Infrastructure

Final Decision for Spark Drives Increase in Fair Value Estimate; Looking Reasonable Value