Nomura cuts Korea Electric Power to neutral on tariff, fuel-cost pressure
The Wall Street Journal’s Energy & Utilities Market Talks roundup, published on Dow Jones Newswires, carried five analyst notes spanning a takeover bid, rating and estimate changes, and shareholder-return plans. Sweden’s EQT offered A$3.13 a share for Cleanaway Waste Management, while Nomura cut Korea Electric Power and DBS Group Research flagged weaker margins at China Aviation Oil.
The notes arrive as volatile energy prices and elevated fuel costs test margins at utilities and energy traders. Several of the notes cite those pressures, or companies’ responses to them, as the basis for their calls.
Jefferies said EQT’s bid for Cleanaway looks opportunistic. Cleanaway has disappointed market expectations over the past five years despite owning assets that are difficult for rivals to replicate, analyst Amit Kanwatia wrote. “EQT’s approach is therefore understandable, given the option to make changes to the business and deliver stronger cash flow growth in the medium term,” he said. EQT is offering A$3.13 a share, which Jefferies said values Cleanaway’s equity at A$7.0 billion. Cleanaway missed market expectations with Ebit guidance of A$500 million to A$530 million in FY27. “Therefore this bid does insulate shareholders from another disappointing result, while supporting the board’s intention to recommend,” Jefferies added.
Nomura analysts Cindy Park and Dongmin Lee said Korea Electric Power’s 2026 earnings are likely to come under pressure from marginal electricity-tariff increases and higher energy prices. Elevated fuel and electricity purchase costs are weighing on the South Korean state utility’s margins, they wrote. Nomura slashed its 2026 net-profit estimate for the company by 48% to 4.871 trillion won and said it expects return on equity of 9.7% this year, down from its earlier estimate of 17.9%. The firm cut its rating on the stock to neutral from buy and lowered its target price to 40,000 won from 61,000 won. Shares traded 0.3% lower at 33,000 won.
DBS Group Research said China Aviation Oil (Singapore)‘s 17% fall in first-half net profit disappointed it and prompted a review of its earnings estimates. The jet fuel trading company’s core trading segment suffered from weaker margins as gross profit per ton from middle distillates plunged, said analyst Jason Sum. While jet fuel trading conditions should improve from the first-half trough, he expects trading margins to remain pressured due to volatile energy prices. Sum said he anticipates cutting his earnings estimates after meeting China Aviation’s management on Tuesday and is reviewing the stock’s buy rating and target price of 2.50 Singapore dollars. Shares were down 2.5% at S$1.54.
Origin Energy’s flat annual dividend surprised UBS analyst Tom Allen, who had been bullish on the stock. He noted that Origin’s leverage is well below the bottom end of a 2-3x target range and that its FY27 capex guidance is lower than expected. “Given these outcomes and a conservative approach to dividends, we think it introduces the potential for Origin to pursue scale growth over FY27,” Allen said. Potential deals include small energy and broadband retailers, which would help reduce customer churn and boost value, UBS said. Origin could also offer full-scale energy and infrastructure solutions to data centers and hyperscalers, and could invest more in Octopus Energy and Kraken. Origin ended Thursday at A$11.86.
J.P. Morgan said Orsted investors will be focusing on the Danish renewable-energy group’s plans for shareholder returns after the company posted second-quarter results with no surprises. Orsted provided information on its plan to reinstate dividends for 2026 and to consider capital rebalancing measures after 2027, depending on the balance sheet, which the analysts said is expected to be a share buyback though a special dividend is also possible. Investor focus will be on upcoming offshore wind tenders after Orsted failed to win any contracts during a recent Danish tender. “We would also expect investors to focus on the company’s capital allocation framework and what they consider an ‘overcapitalized’ position post-2027,” J.P. Morgan wrote. Shares were down 3% at 143.85 kroner.