J.P. 摩根-美股-电力公用事业行业-2019年Q2北美大中型电力公用事业企业业绩预览-2019.7.15-68页 (2).pdf

North America Equity Research15 July 2019Utilities&Power2Q19 Large&Mid-Cap Earnings PreviewUtilities and PowerChristopher Turnure AC(1-212)622-Bloomberg JPMA TURNURE Richard W Sunderland(1-212)622-Peter Giannuzzi Jr.(1-212)622-J.P.Morgan Securities LLCSee page 66 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Key 2Q themes include regulatory activity(SO,ED,AGR,XEL,CNP),lingering legislative activity(DUK,FE,EXC),financing clarity(NI,FTS and possibly ATO),the Atlantic Coast and Mountain Valley pipeline projects,the late August PJM RPM auction and potential FERC-related action here,and post-legislation CA wildfire company updates.This quarter is generally the least impactful of the year for utilities,and we expect little chance of annual guidance changes other than potentially AGR or FE.We see several companies falling near the bottom end of 2019 guidance and/or consensus being too high in the absence of a warm 3Q,including DUK,SO,D,NI,FTS and AGR.Nonetheless we see both DUK and NI as being well positioned near-term and into the quarter,and also favor CNP here.Despite YTD and 2Q underperformance,we still see reason to sell AGR,and see risk near-term for PEG and FTS shares,and note we expect a poor quarter result for EVRG.See our 7/11 Sector Strategy piece for our latest thoughts on utility valuation.Included are detailed comments and revised 2Q19 forecasts for our large and mid-cap coverage:AEP,AES,AGR,ATO,CNP,D,DUK,ED,EIX,ETR,EVRG,EXC,FE,FTS,NEE,NI,PEG,SO,SRE,XEL.Favor DUK,NI,CNP:We still see risks to the DUK story and see most of the YTD underperformance as justified,but the 11%2020 P/E discount to peers and 4.3%yield are noteable in a utility peer group perceived as expensive.We see little priced into shares for potential ACP construction resumption post biological opinion next month,ACP Supreme Court case acceptance or legislative success in North Carolina.Investors may view NI as less risky post a near-term NTSB report release,conclusion of the class action lawsuit and more clarity on equity and preferred stock financing needs this quarter.Additionally,any near-term asset sale traction could be a catalyst.For CNP we see a low bar for success with the quarterly result,and highlight that at 16.0 x 2020E the stock is the cheapest US,non-California stock in our coverage other than EXC.We expect management to focus on non-regulated business performance and settlement or other related progress in the ongoing HE rate case.Avoiding AGR,FTS,PEG and see weak EVRG result:AGRs weak 2019 share performance does not lower our UW conviction,and at a 10%premium to peers on 2020E with downside to outer year consensus likely we still see heightened risk.We expect a strong chance of lowered 2019 guidance at 2Q results,with only a larger asset sale gain assumption potentially buying time here,and await the annual dividend increase declaration as soon as this week.North of the border,we see risk to the print for FTS despite favorable yoy FX,and remain well below 2019 consensus.We note upcoming rating agency commentary may drive higher equity commentary at the September analyst day,and that forthcoming IRS anti-hybrid rule finalization appears to be a material risk to earnings.We also are hesitant on PEGnear-term driven in-part by our expectation of a disappointing 2Q result.Post-2Q,we see uphill battles in both the FERC/PJM RPM reform conversation in NJ and the decoupling negotiations tied to CEF spending.We remain OW on EVRG shares but note our well below consensus 2Q forecast,driven by weather and O&M timing.2North America Equity Research15 July 2019Christopher Turnure(1-212)622-Equity Ratings and Price TargetsMkt CapPriceRatingPrice TargetCompanyTicker($mn)CCYPriceCurPrevCurEnd DatePrev End DateAES Corp.AES US11,392.36USD17.08OWn/c20.00Dec-1919.00n/cAmerican Electric PowerAEP US44,627.19USD90.25OWn/c93.00Dec-1990.00n/cAtmos EnergyATO US12,118.55USD106.46OWn/c115.00Dec-19109.00n/cAvangrid,IncAGR US15,463.94USD49.93UWn/c46.00Dec-1945.00n/cCenterPoint Energy,Inc.CNP US14,550.48USD28.87OWn/c33.00Dec-1932.00n/cConsolidated Edison Inc.ED US28,734.08USD88.96UWn/c88.00Dec-1986.00n/cDominion Energy IncD US61,457.50USD77.50Nn/c77.00Dec-1975.00n/cDuke Energy Corp.DUK US64,484.90USD88.70Nn/c91.00Dec-1988.00n/cEdison InternationalEIX US23,099.28USD70.64Nn/c73.00Dec-19n/cn/cEntergy Corp.ETR US19,963.81USD103.87Nn/c104.00Dec-1997.00n/cEvergy IncEVRG US14,969.44USD61.14OWn/c63.00Dec-1961.00n/cExelon Corp.EXC US47,686.32USD49.06Nn/c51.00Dec-19n/cn/cFirstEnergyFE US23,354.58USD43.41Nn/c44.00Dec-1942.00n/cFortis Inc.FTS CN17,226.11CAD52.07Nn/c52.00Dec-1950.00n/cNextEra Energy Inc.NEE US100,607.90USD208.73OWn/c212.00Dec-19201.00n/cNiSource Inc.NI US10,943.82USD29.34OWn/c30.00Dec-1929.00n/cPG&E Corp.PCG US10,223.80USD19.40Nn/c14.00Dec-19n/cn/cPublic Service Enterprise GroupPEG US30,698.85USD60.55Nn/c62.00Dec-1961.00n/cSempra EnergySRE US38,749.53USD139.89Nn/c136.00Dec-19133.00n/cThe Southern CompanySO US58,175.15USD55.67UWn/c53.00Dec-1951.00n/cXcel EnergyXEL US31,372.80USD60.80OWn/c63.00Dec-1961.00n/cSource:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 12 Jul 19.3North America Equity Research15 July 2019Christopher Turnure(1-212)622-Table 1:JPM Utilities Coverage Estimates vs.Consensus,Y/Y Growth,and Guidance SummaryQ218 EPSQ219 EPSQ219 vs.Q218 Annual Growth2018 EPS2019 EPS19 vs.18 GrowthTickerActualConsJPMeGuidanceConsJPMeActualConsJPMeGuidanceConsJPMeAEP1.01 1.00 0.94 n/a-1.3%-6.5%3.95 4.13 4.16 4.00-4.204.5%5.4%AES0.25 0.29 0.26 n/a14.8%4.9%1.24 1.33 1.34 1.28-1.407.3%8.0%AGR0.41 0.40 0.35 n/a-2.5%-14.7%2.21 2.26 2.15 2.25-2.402.1%-2.5%ATO1.57 0.72 1.82 n/a-53.9%16.4%4.00 4.33 4.30 4.25-4.358.3%7.5%CNP0.30 0.33 0.30 n/a8.3%-1.5%1.54 1.65 1.63 1.60-1.706.6%5.4%D0.86 0.81 0.79 0.70-0.80-5.1%-7.3%4.05 4.20 4.11 4.05-4.403.7%1.5%DUK0.93 0.98 0.93 n/a5.2%0.2%4.72 4.93 4.84 4.80-5.204.4%2.6%ED0.61 0.61 0.58 n/a1.0%-5.3%4.33 4.36 4.32 4.25-4.450.6%-0.2%EIX0.85 1.09 1.06 n/a28.1%24.2%4.15 4.67 4.83 4.72-4.9212.5%16.4%ETR1.42 1.34 1.47 n/a-5.8%3.4%5.29 5.30 5.34 5.10-5.500.1%0.9%EVRG0.56 0.71 0.55 n/a26.6%-1.5%n/a 2.92 2.89 2.80-3.00EXC0.71 0.62 0.62 0.55-0.65-12.0%-12.9%3.12 3.15 3.12 3.00-3.300.9%-0.1%FE0.62 0.61 0.62 0.55-0.65-2.4%0.3%2.59 2.54 2.45 2.45-2.75-1.9%-5.1%FTS0.57 0.61 0.58 n/a6.8%3.1%2.51 2.63 2.51 n/a4.6%-0.2%NEE2.11 2.28 2.21 n/a8.2%4.5%7.70 8.39 8.37 8.00-8.509.0%8.7%NI0.07 0.07 0.04 n/a-6.1%-41.9%1.30 1.30 1.27 1.27-1.330.3%-1.9%PCG1.16 0.99 1.01 n/a-14.7%-13.0%4.00 3.85 3.74 n/a-3.8%-6.4%PEG0.64 0.66 0.62 n/a2.8%-3.5%3.12 3.26 3.28 3.15-3.354.5%5.1%SO0.80 0.71 0.74 0.71-11.3%-7.8%3.07 3.03 2.98 2.98-3.10-1.2%-2.9%SRE1.35 1.29 1.15 n/a-4.3%-15.0%5.57 6.04 6.07 5.70-6.308.5%8.9%XEL0.52 0.54 0.53 n/a4.5%2.8%2.47 2.61 2.61 2.55-2.655.8%5.6%Source:Bloomberg,JPM Estimates 4North America Equity Research15 July 2019Christopher Turnure(1-212)622-US Q2 CDDs above normal,down YOYQ219 US cooling degree days were+12%versus normal and-11%YOY,with significant variation regionally from E N Central and W N Central(-17%,-10%versus normal)to South Atlantic and E S Central(+36%,+29%versus normal).CDDs were broadly lower YOY with the exception of South Atlantic(+4%),and we note substantial declines across E N Central and W N Central(-43%,-44%).We note that following hotter than normal May weather(CDDs+26%),more impactful June CDDs were+3%versus normal and-17%YOY,as well as down YOY across all regions.Table 2:2018-2019 US Cooling Degree Day&Heating Degree Day SummaryQ219 CDDQ219 ActualQ218 ActualNormY/Yvs.NormQ418 HDDQ418 ActualQ417 ActualNormY/Yvs.NormUS380428340-11%12%US1,5971,5001,6386%-3%New England769369-18%10%New England2,2902,1522,2726%1%Middle Atlantic155189140-18%11%Middle Atlantic2,0151,9532,0643%-2%E N Central164289197-43%-17%E N Central2,3142,2292,3164%0%W N Central236425263-44%-10%W N Central2,5722,3752,5128%2%South Atlantic7697385664%36%South Atlantic1,0239831,0584%-3%E S Central589626458-6%29%E S Central1,3481,2931,3774%-2%W S Central851899777-5%10%W S Central92578689618%3%Mountain316412360-23%-12%Mountain1,9011,6241,96417%-3%Pacific111123150-10%-26%Pacific9528951,1456%-17%Q119 HDDQ119 ActualQ118 ActualNormY/Yvs.NormQ318 CDDQ318 ActualQ317 ActualNormY/Yvs.NormUS2,2352,1322,2425%0%US96584276615%26%New England3,1962,9943,2197%-1%New England63641634853%83%Middle Atlantic2,9342,8682,9682%-1%Middle Atlantic77255351140%51%E N Central3,2753,0693,2277%1%E N Central68650150237%37%W N Central3,6023,3383,3268%8%W N Central73764865014%13%South Atlantic1,3431,4211,523-5%-12%South Atlantic1,2661,1711,0778%18%E S Central1,6681,7491,895-5%-12%E S Central1,1981,02199717%20%W S Central1,1901,1531,2703%-6%W S Central1,5501,4421,4177%9%Mountain2,3912,1932,3219%3%Mountain9999408106%23%Pacific1,5781,3611,41916%11%Pacific7507465061%48%Source:NOAA5North America Equity Research15 July 2019Christopher Turnure(1-212)622-Figure 1:2020 Forward ATC Power PricesSource:SNL;ATC=around the clockFigure 2:2021 Forward ATC Power PricesSource:SNL;ATC=around the clockFigure 3:2020 Forward Natural Gas PricesSource:SNLFigure 4:2021 Forward Natural Gas PricesSource:SNLFigure 5:2020 Forward Implied Peak Heat Rates Source:SNLFigure 6:2021 Forward Implied Peak Heat RatesSource:SNL$25$27$29$31$33$35$37$39$41$43$45$47$49Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19PJM WestNew EnglandPJM EastERCOT-Houston$25$27$29$31$33$35$37$39$41$43$45$47$49Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19PJM-WestNew EnglandPJM-EastERCOT-Houston$2$3$3$4$4$5$5Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Nat Gas Price($/MMBtu)TCO Pool(PJM-West)Algonquin Citygate(New England)TranscoZ6 NonNY(PJM-East)Henry Hub(ERCOT-Houston)$2$3$3$4$4$5$5Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Nat Gas Price($/MMBtu)TCO Pool(PJM-West)Algonquin Citygate(New England)TranscoZ6 NonNY(PJM-East)Henry Hub(ERCOT-Houston)9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Heat Rate(Btu)PJM-WestNew EnglandPJM-EastTexas 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Heat Rate(Btu)PJM-WestNew EnglandPJM-EastTexas6North America Equity Research15 July 2019Christopher Turnure(1-212)622-Figure 7:JP Morgan North American Utilities&Power Comparables TableSource:Bloomberg:Price,Cap,EV,Debt to Cap;JPMorgan estimates:PT,Dividend,EPS,CAFD,and multiple derivations thereofJPM Indicies exclude companies being acquired;JPM SMID Index includes$10Bn mkt cap electric,gas&diversified utilitiesPrice Targets all Dec 2019,all forecasts for company fiscal year.ACI CN,ALA CN,EMA CN and FTS CN metrics are denominated in$CAD.Priced 7/12/2019Regulated Electric&Gas UtilitiesPTPriceCapEVDebt toYieldPayoutEPS ForecastP/E MultipleEPS GrowthRatingTickerCompany$bn$bnCap2019E2019E2019E2020E2021E2019E2020E2021E2019E2020E2021EOWAEPAmerican Electric Power Co Inc93 90.25 44.5 71.8 57%3.0%65%4.16 4.39 4.70 21.7 20.5 19.2 5.4%5.5%6.9%OWXELXcel Energy Inc63 60.80 31.3 50.3 59%2.7%62%2.61 2.79 2.97 23.3 21.8 20.4 5.6%6.9%6.7%OWEVRGEvergy Inc63 61.14 14.9 23.9 46%3.2%67%2.89 3.19 3.35 21.1 19.2 18.3 15.6%10.2%5.0%OWATOAtmos Energy Corp115 106.4612.5 16.0 43%2.0%49%4.30 4.64 5.00 24.7 22.9 21.3 7.5%7.9%7.7%OWNINisource Inc30 29.34 10.9 21.0 61%2.7%63%1.27 1.33 1.46 23.0 22.1 20.0 -1.9%4.4%10.1%OWSJISouth Jersey Industries Inc32 33.39 3.1 5.9 71%3.5%107%1.08 1.55 1.75 30.9 21.6 19.1 -21.4%43.1%12.9%NDUKDuke Energy Corp91 88.70 64.6 126.2 57%4.2%77%4.84 5.15 5.39 18.3 17.2 16.5 2.6%6.5%4.5%NFEFirstenergy Corp44 43.41 23.1 43.4 74%3.5%62%2.45 2.35 2.47 17.7 18.5 17.6 -5.1%-4.3%5.2%NEIXEdison International73 70.64 23.0 42.5 55%3.5%51%4.83 4.53 4.72 14.6 15.6 15.0 16.4%-6.2%4.2%NFTSFortis Inc52 52.06 22.5 50.4 57%3.5%73%2.51 2.59 2.72 20.8 20.1 19.1 -0.2%3.3%5.2%NETREntergy Corp104 103.8719.7 38.5 67%3.5%69%5.34 5.49 5.82 19.5 18.9 17.9 13.3%2.9%6.0%NEMAEmera Inc49 53.95 12.7 28.7 67%4.4%87%2.74 2.74 2.89 19.7 19.7 18.7 -4.9%0.1%5.3%NPCGPG&E Corp14 19.40 10.3 32.9 63%0.0%0%3.74 4.16 4.36 5.2 4.7 4.4 -6.4%11.1%4.9%NPORPortland General Electric Co53 54.52 4.9 7.3 50%2.8%62%2.46 2.57 2.67 22.2 21.2 20.4 3.6%4.5%4.1%NACIAltaGas Canada Inc19 25.04 0.8 1.4 51%3.8%68%1.40 1.46 1.51 17.9 17.2 16.6 0.7%4.0%3.7%UWSOSouthern Company53 55.67 57.9 107.1 61%4.4%82%2.98 3.11 3.22 18.7 17.9 17.3 -2.9%4.5%3.5%UWEDConsolidated Edison88 88.96 29.6 50.5 55%3.3%69%4.32 4.56 4.72 20.6 19.5 18.8 -0.2%5.5%3.6%UWALEAllete Inc80 86.86 4.5 5.7 41%2.7%65%3.62 3.81 4.08 24.0 22.8 21.3 7.2%5.2%6.9%UWSRSpire Inc77 85.25 4.3 7.1 54%2.8%64%3.71 3.76 3.92 22.9 22.6 21.7 -0.1%1.3%4.2%Mostly Regulated Electric Peers20.4 56%3.2%65%20.9 20.0 18.9 1.9%4.7%5.5%S&P 50018.2 16.4 9.2%10.9%0.0%Hybrid Utilities,Power&DiversifiedsPTPriceCapEVDebt toYieldPayoutEPS ForecastP/E MultipleEV/EBITDARatingTickerCompany$bn$bnCap2019E2019E2019E2020E2021E2019E2020E2021E2019E2020E2021EOWNEENextera Energy212 208.73100.0 142.9 50%2.4%60%8.37 8.96 9.81 24.9 23.3 21.3 13.8 12.4 11.4 OWCNPCenterpoint Energy33 28.87 14.5 29.6 53%4.0%71%1.63 1.81 1.92 17.8 16.0 15.1 9.5 8.5 8.2 OWAESAES Corp20 17.08 11.3 32.8 75%3.2%41%1.34 1.42 1.49 12.7 12.0 11.5 9.4 8.7 7.4 NDDominion Energy77 77.50 62.2 105.3 61%4.7%89%4.11 4.38 4.66 18.9 17.7 16.6 12.3 11.5 10.9 NEXCExelon Corp51 49.06 47.6 87.6 52%3.0%47%3.12 3.07 3.03 15.7 16.0 16.2 9.7 9.6 9.5 NSRESempra Energy136 139.8938.4 67.5 57%2.8%64%6.07 6.55 7.42 23.1 21.4 18.9 16.3 13.9 12.8 NPEGPublic Service Enterprise62 60.55 30.6 46.1 52%3.1%57%3.28 3.50 3.62 18.5 17.3 16.7 11.0 10.8 10.5 NAQNAlgonquin Power&Utilities10 12.46 6.1 10.7 45%4.3%95%0.57 0.59 0.62 21.9 21.3 20.0 14.8 13.7 12.5 NALAAltaGas Ltd18 19.93 5.5 15.5 57%4.8%103%0.93 1.18 1.19 21.4 16.8 16.8 8.0 12.1 11.6 NHEHawaiian Electric Industries37 44.58 4.9 5.5 48%2.9%66%1.94 2.12 2.23 23.0 21.0 20.0 9.6 9.0 8.6 NBKHBlack Hills Corp77 79.97 4.8 8.0 58%2.6%58%3.54 3.70 3.89 22.6 21.6 20.6 12.8 11.9 11.4 UWAGRAvangrid Inc46 49.93 15.4 22.4 29%3.6%83%2.15 2.36 2.49 23.2 21.2 20.1 10.9 9.7 9.0 YieldCosPTPriceCapEVDebt toDividend ForecastYieldDividend GrowthPrice/CAFDRatingTickerCompany$bn$bnCap2019E2020E2021E2019E2020E2021E2019E2020E2021E2019E2020ENNEPNextera Energy Partners LP47 50.10 7.8 11.9 38%2.032.332.654.1%4.6%5.3%14.6%14.6%14.0%22.1 17.2 NPEGIPattern Energy Group Inc22 23.09 2.0 3.5 51%1.691.691.697.3%7.3%7.3%0.0%0.0%0.0%11.7 9.6 7North America Equity Research15 July 2019Christopher Turnure(1-212)622-AES Corp.OverweightCompany DataShares O/S(mn)66752-week range($)18.52-12.71Market cap($mn)11,392.36Exchange rate 1.00Free float(%)99.0%3M-Avg daily vol(mn)5.793M-Avg daily val($mn)96.9Volatility(90 Day)19Index