- Utility sector stocks are gaining investors’ attention because of the ongoing progress towards achieving net zero-emission.
- The sector has been in the spotlight after the G20 summit.
- The utility index delivered a negative YTD and positive QTD return.
The utility sector includes companies that offer services such as electricity, natural gas and water. While, majority of the countries are pondering upon environmental change today, in Australia, the discussion is around ensuring the stability of the country’s energy and utility sector in the next 10 years. The focus is mainly on meeting environmental targets, encouraging economic prosperity, and maintaining national security.
In 2021, the Australian power and utility sector continue to experience radical transformation. The index has delivered a negative YTD return of 1.01% and a QTD return of 4.15%.
The sector has recently gained huge attention following the G20 summit in Italy and the ongoing changes in the sector. The country is also making massive progress in renewable energy to provide people with sustainable gas and energy sources.
In 2016, renewable energy provided ~17.5% of Australia’s electricity. The next year, over 35 new projects started. Currently, the Australian government is also taking initiatives to achieve net-zero carbon emission.
3 stocks from utilities sector to watch out for in 2022
As a result of these ongoing developments in the utility space, investors are gradually gaining interest in the companies.
On that note, let us check out three stocks from utility space that made significant progress in 2021 and see how they are positioned.
ReNu Energy Ltd (ASX:RNE)
ReNu Energy aims to offer innovative, clean energy products and services, creating sustainable value for its clients & shareholders. It delivered a YTD return of 138.1%.
On 10 November 2021, the Company signed a Share Purchase Agreement to acquire Australian green hydrogen business, Countrywide Renewable Hydrogen Limited.
Countrywide Renewable Hydrogen Limited is an Australian company that originates Green Hydrogen projects to build them in partnership with project partners as well as governments. It has a pipeline of prospects in Canada as well as the US. This Company also targets domestic supply and aims to expand the project for upcoming export demand.
In September 2021, it announced an investment in Enosi Australia Pty Ltd and on 30 November 2021, RNE completed the second tranche of its investment in Enosi.
The stock closed 1.041% higher at AU$0.097 per share today.
AusNet Services Ltd (ASX:AST)
AusNet Services is an ASX listed energy firm that owns and operate over AU$11 billion of electricity and gas network assets. It owns as well as run the Victorian electricity transmission network. AST delivered a YTD return of ~43%.
Recently, the Company is in the news after Brookfield Asset Management Inc informed that Australian Energy Holdings 4 Pty Ltd got written confirmation from the Foreign Investment Review Board that the Commonwealth Bank has no objection to the proposed acquisition of AusNet via the proposed scheme of arrangement.
- Canadian bidder - Brookfield takes over AusNet Services
- Revised proposal from APA Group outflanks Brookfield’s $7 billion AusNet deal
- AusNet share price soars over offer from Brookfield Asset Management
The implementation of the scheme is subjected to several criteria like AST’s shareholder approval at the Scheme Meeting and Court approval as per the Scheme Implementation Deed.
The stock closed 0.394% lower at AU$2.530 per share on Wednesday.
Energy World Corporation Ltd (ASX:EWC)
Energy World Corporation is into the production and sale of power, oil and natural gas. It develops independent power projects. Besides, it also manufactures and sells liquefied natural gas and is involved in developing energy linked projects.
In FY2021, EWC delivered a YTD return of 30.43%. During the period, the Company experienced the impact of COVOD-19 on its business. As a result, there was a 6.2% dip in the revenue to US$149.4 million. Net profit declined significantly from US$12.3 million to US$1.8 million, representing various one-off developments that happened during the period.
Despite the challenges posed by COVID-19, the Company could operate and manage its current investments and make further development in its Power, Gas as well as LNG Projects under development in Indonesia and Philippines, and the process to resume gas production in Australia.
Also, it implemented all required and advised recommendations of national as well as local regional level governments where the Company was operational related to COVID-19.
Besides, EWC raised US$50 million under the Entitlement Offer, which was used to make payment to Augusta Investments I Pte. Ltd and pay linked costs and other corporate and project development purposes. In October 2021, the Company completed its final loan repayment from Augusta Investments. On 22 October 2021, its subsidiary in Indonesia, PT Energi Sengkang, made its final loan repayment to the Development Financial Institutions under the PT Energi Sengkang loan facility.
The stock closed at AU$0.090 per share today.
The above players made significant progress in 2021 and delivered a double-digit YTD return. With the ongoing development in the utility space, it would be interesting to see how players perform in the coming period.