DUET Group

Proportionate earnings fall in 1H 17: DUET Group (ASX: DUE) has raised over $1.6 billion of term debt and refinanced in 1H17. The group also reaffirmed 18.5 cps guidance for FY17. Moreover, the Scheme Implementation Agreement has been signed with CKI-led consortium to acquire 100% of DUET. However, the transaction remains subject to regulatory approvals. The Scheme Meetings are expected to be held in April 2017 and the implementation by mid-May 2017. On the other hand, the proportionate earnings in 1H 2017 fell 6.8% on a pro forma basis against prior corresponding period (pcp), and down 2.4% on actual pcp, mainly due to $18.8 million of non-recurring items. DUE stock has risen 17.37% in the last three months as on March 01, 2017 placing them at a high level. We give an “Expensive” recommendation on the stock at the current price of – $ 2.80
 

1H 17 Financial Performance (Source: Company Reports) 

Spark Infrastructure Group

Reaffirmed the distribution guidance of 2017: Spark Infrastructure Group (ASX: SKI) has reaffirmed the distribution guidance of 2017 and the same is expected to be 15.25cps (approximately 5% higher than 2016). For 2018, the group forecasted 16.0cps which is a 5% higher than 2017. Moreover, in FY 16 the standalone operating cash flow grew 47.4% to $305.6 million against the prior corresponding period. The group undertook productivity and efficiency efforts via VPN World CLASS program and realized total identified savings of $167 million per annum. SKI stock has a solid dividend yield and we give a “Buy” recommendation on the stock at the current price of – $ 2.32

Infigen Energy Ltd

Secured a power purchase agreement: Infigen Energy Ltd (ASX: IFN) secured a power purchase agreement (PPA) with EnergyAustralia for 60% of the output (electricity and LGCs) from the proposed 113.2 MW Bodangora wind farm project being developed near Wellington in New South Wales. H1 FY17 production has been 889 GWh, which is up 18% on prior corresponding period (pcp). EBITDA was $84.0 million, up $26.0 million or 45% on pcp while net profit after tax was $21.4 million, up $23.6 million on pcp. The group also reported for operating costs rise of 15% to $21.1 million, up $2.8 million on pcp owing to higher production-linked incentive payments and Woodlawn wind farm post-warranty operations and maintenance cost step-up. IFN stock has risen 14.04% in the last three months as on March 01, 2017 and we believe the stock has more potential. We give a “Speculative Buy” recommendation on the stock at the current price of – $ 0.99

ERM Power Ltd

Loss in 1H 17: ERM Power Ltd (ASX: EPW) has reported the underlying EBITDAF of $11.1 million in the 1H 17, as compared to $37.1 million for 1H FY2016. The company has reported an underlying NPAT loss of $51.0 million due to the lower EBITDAF and the impact of a one-off tax difference of $36.6 million. On the other hand, EPW has announced that it has reached agreement on commercial terms that would underpin the construction of two renewable energy generation assets in Australia. The two facilities would have a combined capacity of more than 300MW. The stock is trading at high levels, and we give an “Expensive” recommendation on the stock at the current price of – $ 1.08

AGL Energy Ltd

Concerns over margins and retail accounts pressure: AGL Energy Ltd (ASX: AGL) has reported Statutory Profit after tax of $325 million in the first half of 2017, a rise of $774 million on the prior corresponding period. The Underlying Profit after tax grew 4% to $389 million as a result of strength in the wholesale electricity market and the ongoing delivery of AGL’s cost reduction programs. Moreover, AGL expects the Underlying Profit after tax for the FY 17 to be within the upper half of its guidance range of $720 million to $800 million, subject to normal trading conditions for the remainder of the financial year.
 

1H 17 Financial Performance (Source: Company Reports)
 
On the other hand, the group’s gas margins seem to be under pressure while the number of retail customer accounts fell over 1.1% adding to some concerns. The stock is trading close to its 52-week higher price. We give an “Expensive” recommendation on the stock at the current price of – $ 24.57

AusNet Services Ltd

Settlement of the Mickleham Road Bushfire Class Action: AusNet Services Ltd (ASX: AST) has informed that the parties to the Mickleham Road Bushfire Class Action have agreed to a settlement of the litigation, subject to Court approval. The date for hearing the application for Court approval of the proposed settlement has not yet been set. The settlement sum is $16m, inclusive of legal costs and interest. The amount to be paid by the parties include AusNet’s A$5 million, the Home City Council’s A$6 million and Homewood Consulting’s A$5 million. The group has recently successfully priced a 425 million 10.5-year Australian Dollar (AUD) bond issue and intends to use the proceeds to refinance existing debt and fund continued asset base growth. AST stock is currently trading at a slightly high level while we give an “Expensive” recommendation on the stock at the current price of – $ 1.63

APA Group

Execution of a non-binding Heads of Agreement: APA Group (ASX: APA) and Cooper Energy Ltd have announced the execution of a non-binding Heads of Agreement aligning the two companies in the development of Gippsland Basin gas projects to bring new sources of gas supply to south east Australia. APA’s 1H FY17 results entailed an increase of 13.8% or $92.1 million in earnings before interest, tax, depreciation and amortisation for the six months to December 2016 of $759.7 million. The interim distribution was 20.5 cents per security, which was an increase of 7.9% or 1.5 cents per security over the previous corresponding period. Net profit after tax was up 40.5% to $139.8 million. The group’s acquisition strategy (latest acquisitions of the Diamantina and Leichhardt Power Stations and Ethane Pipeline) contributed a full period of earnings. Trading at a solid dividend yield, we give a “Hold” recommendation on the stock at the current price of – $ 8.66

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