From FHE to NEW, GNX: ASX Utilities stocks zooming in August

Highlights

• Companies belonging to Utilities sector provide services such as electric power, natural gas, water supply, and sewage removal.
• Australia spends nearly US$6 billion annually on water and wastewater treatment services.
• The government has established the National Water Grid Fund worth US$2.5 billion.
• FHE, NEW, FLC, and GNX are four stocks from the ASX Utilities sector that are performing well in this month.

The Utilities sector comprises those companies which are engaged in providing utility services such as electric power, water supply, natural gas, and sewage removal.

Australia spends nearly US$6 billion annually on water and wastewater treatment services and there are about 300 urban water utilities in the country. The National Water Grid Fund worth US$2.5billion has been established by the government to fund water infrastructure investments. The fund was established by the government as a 10-year infrastructure program. The government has also allocated funds to support new and improved projects as part of the 2021-2022 budget. 

The S&P/ASX 200 Utilities is the benchmark of the ASX Utilities sector. As of 25 Aug 2022, the index was down by about 1.14% on a month-to-date (MTD) basis.  

In this article, we at Kalkine Media® will discuss a few stocks from the Utilities sector that have outperformed the benchmark during the given period

Frontier Energy Ltd (ASX:FHE)

Shares of the renewable energy company Frontier Energy Limited have soared by about 49.5% this MTD (26 Aug 2022). The company's ongoing renewable energy project is the Bristol Spring's Solar Project (BSS) project situated in Western Australia. Let us know about some important achievements of the company in this month:

• Frontier Energy reported encouraging results from its Hydrogen Pre-Feasibility Study. The study conducted by Xodus Group for its BSS project highlighted the low estimated cost of AU$2.83 per kilogram of hydrogen produced. It is likely that BSS Project would be highlighted as one of the cheapest producers of green hydrogen in Australia. 
• Started trading in the US-based OTCQX® (OTC) market. Frontier Energy’s move to start trading on the OTC would help in improving the visibility and accessibility of the company to North American investors.
• Secured exclusive options to increase land holding over an additional 651 hectares neighbouring the BSS project

Frontier Energy: Recent Developments

• Identification of several existing water sources suitable for the production of hydrogen. It cuts down the need for a desalination plant, which could incur significant expenses
• Signed a Memorandum of Understanding (MOU) with global hydrogen experts, Nel Hydrogen Electrolyser AS (Nel) and ENGV

New Energy Solar Ltd (ASX:NEW)

Glimpse of 2022 half-year results of the company

• 9% increment in revenue from underlying operations compared to prior corresponding period (pcp).
• 6% increment in earnings before interest, tax, depreciation, and amortisation (EBITDA) compared to pcp.
• Inked a binding agreement with MN8 Energy for the sale of its solar assets in the US for US$244.5 million.
• Despite asset sales, generation performance during the period surpassed that in the pcp.
• Exercised MS2 tranche two option for funding the distribution of a capital return of nearly three and a half cents per share approved by shareholders.

Fluence Corporation Ltd (ASX:FLC)

Fluence Corporation provides water and wastewater treatment solutions. As of 25 Aug 2022, the company's stock price has soared by about 13.3% on an MTD basis.

Major achievements of the company in Q2 and 1H 2022 are as follows:

• 9% increment in revenues from continuing operations compared to pcp
• During H1 2022, 52% increment in revenues from continuing operations compared to pcp
• Improvement in cost efficiency
• Contracted backlog of US$80.0million, of which US$49.0million is anticipated to become revenue in 2022
• Revenue outlook for the full year 2022 increased by 40% to US$144million, compared to US$103.2M in 2021

Further, the company made two important business announcements in May.

• Positioned its first operation and maintenance contract in China. The contract spans eight existing MABR wastewater treatment plants in China. The contract worth US$1.0 million is renewable one-year terms.
• Bagged a contract worth US$1.9million from the U.S. Federal Emergency Management Agency (FEMA). Under the agreement, the company will supply four wastewater treatment plants to FEMA. Revenue from the contract would be recognised by the end of the 3rd quarter of CY2022.

Genex Power Ltd (ASX:GNX)

As of 26 Aug 2022, shares of Genex Power have rallied by nearly 11.6% this MTD. The company has a portfolio of over AU$1billion of renewable energy generation and storage projects throughout Australia. The company's top project is Kidston Clean Energy Hub.

Recently, the company informed the market about the acquisition of 100% interest in Bulli Creek Clean Energy Project from Solar Choice Pty Ltd. As per the acquisition, Genex will pay AU$5million to Solar Choice.

Major activities of Genex Power for the quarter ending 30 June 2022 are as follows:

• Generation of 26,334MWh of renewable energy from the Kidston Solar Project (KS1) and 17,044MWh of renewable energy from the Jemalong Solar Project (JSP)
• Record revenue of AU$26.1million for FY22
• Implemented a new Subordinated Loan Agreement with Infradebt Pty Ltd to carry out refinancing of the existing subordinated debt facility for KS1 and JSP

In May, Genex Power implemented a Joint Development Agreement with Electric Power Development Co., Ltd (J-POWER) for Kidston Stage 3 Wind Project. J-POWER adds significant global wind experience to the development of the project. Through this agreement, J-POWER gains 50% interest in the project by the further contribution of AU$3.0million in developing the project.