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雷达卡
Upgrade industry from Cautious to In-Line: Two
considerations: (1) recovery of the Economic
Momentum Index, which correlates inversely with
utilities’ performance vs. TOPIX, is toning down, setting
the scene for a turning point in sentiment on utilities
stocks; (2) moves to toughen the response to global
warming under a new political leadership have been one
reason for worsening sentiment, but we expect only
limited impact on earnings for the next three years. The
market is shifting focus to immediate risks, such as rapid
yen appreciation, dilution due to financing, etc. All of this
leaves open the door for near-term stock rerating.
Gauge impact of tighter greenhouse gas rules: The
Hatoyama Cabinet has a stated mid-term target to cut
greenhouse gases 25% by 2020 vs. 1990. This report
looks at (1) the viability of this target as an international
commitment, and scenarios for attainment, (2) impact on
the electricity industry, and (3) whether stock selection
can be based on tougher anti-warming measures.
Limited impact on fundamentals in next 3 years:
Whether the 25% reduction target is viable as an
international commitment, and how it might be achieved,
have yet to be seen. But our main concern – that nuclear
power policy would stagnate with the change of
government – is dissipating. And if nuclear power plays
a starring role in anti-warming policy, we also think any
damage, such as from increased costs arising from
environmental measures, could be readily offset.
Global warming not a stock-picking theme yet;
investment ratings intact: We cut TEPCO’s EPS
forecast & PT, as incentives to pursue profit levels far
exceeding the fair return are fading for now, but stay OW.
While downside risk is generally limited, our core pick is
still TEPCO, with the greatest upside among 5 EPCOs.
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