The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET. SK Innovation is likely to benefit from higher lubricant base oil prices, LS Securities analyst K.H. Chung says. The South Korean refiner is a global leader in premium lubricant base oils, producing about 80,000 barrels of Group III base oils a day, Chung writes in a note. She expects the supply shortage of lubricant base oils to persist for more than a year. Tight supply of kerosene and diesel and wider refining margins could also continue to boost the company's earnings, she adds. LS Securities upgrades the stock to buy from hold and raises its target price to 187,000 won from 126,000 won. Shares end 2.6% higher at 158,000 won.
YTL Power International could see upside from its expanding data-center and AI infrastructure, as well as renewed power-generation opportunities, says Hong Leong IB analyst Daniel Wong in a note. Its Kulai and Sedenak West hubs offer 2.4GW of potential data-center capacity, while its AI-GPU capacity could scale to 100MW or more and support a new services business. The procurement of seven gas turbines totaling 5.25GW also positions YTL for power-generation growth and supports its expanding data-center pipeline, he reckons. Higher water tariffs and planned treatment plants at its unit Ranhill Utilities should support earnings as Johor's water demand rises, he adds. Hong Leong raises its target price to 8.08 ringgit from 7.58 ringgit and keeps a buy rating. Shares are 1.4% higher at 5.62 ringgit.
Cenovus Energy is paying a fuller price for Athabasca Oil, but the cost of scaling up is likely worth it, according to TD Cowen's Menno Hulshof. In a report, the analyst says the company is paying a premium for growth, resource depth and synergy potential. He says that the deal consolidates scalable thermal resources around Cenovus' Christina Lake area operations, with around C$85 million in synergies identified, which CVE's upstream operating expertise could drive upside beyond. While the C$5.7 billion price tag is higher, Hulshof calls the cost inevitable given it is one of the last remaining thermal plays and arguably carries a scarcity premium.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing