Emera Inc

Emera Inc (TSX: EMA) is an energy and services Company based out of Canada. The Company makes an investment in generation, distribution and transmission of electricity and gas. EMA has assets of over $34 billion and customers around 2.5 million from the Caribbean, the US and Canada.

Recent News

On 20 August 2020, Emera announced the selection of Peter Gregg as CEO & President of NSPI (Nova Scotia Power Inc).

Financial Highlights – Q2 and H1 Financial Year 2020 (30 June 2020, CAD, million)

(Source: Quarterly Report, Company Website) 

In the first half of the financial year 2020, driven by lower revenue from regulated electric and gas and non- regulated businesses, the operating revenue declined to CAD 2,806 million (H1 FY2019: CAD 3,196 million) and the operating revenue in Q2 FY2020 declined to CAD 1,169 million (Q2 FY2019: CAD 1,378 million). Due to lower revenue, the operating profit declined to CAD 610 million in H1 FY2020 and CAD 189 million in Q2 FY2020. Reflecting higher other income and lower interest expenses, the PBT (profit before tax) increased to CAD 921 million in H1 FY2020 (H1 FY2019: CAD 507 million), while PBT in Q2 FY2020 declined to CAD 80 million (Q2 FY2019: CAD 101 million). The net income in H1 FY2020 surged to CAD 616 million in H1 FY2020 (H1 FY2019: CAD 440 million), while net income in Q2 FY2020 declined to CAD 81 million (Q2 FY2019: CAD 116 million). The cash balance as on 30 June 2020 stood at CAD 285 million (31 December 2019: CAD 222 million).

Share Price Performance

EMA 1 Year Daily Technical Chart. Source: Refinitiv (Thomson Reuters)

Emera Inc shares closed at CAD 53.60 at the time of writing after the market close on 20 August 2020. Stock 52 week High is CAD 60.94 and Low is CAD 42.12.

Key Risks

The Company’s operations are negatively impacted by risks related to interest rate and Liquidity. Risks related to environment and climate change such as hurricanes, tornadoes, avalanches and rockslides etc. could hamper the operations of the Group. Any change in regulations and government policies could affect the overall business of the Company.

Conclusion

The Company has shown an increase in financial performance in the first half of the financial year 2020. The Company witnessed a decline in revenue from core operations, while the cash balance increased. As a result of Covid-19, the Company experienced a reduction in load and operating expenses. On a consolidated basis, EMA did not see any material impact on the net earnings. Favourable weather conditions also helped the Company to reduce consolidated impact. The strength and pace of economic recovery are uncertain and may have an adverse impact on the Company’s performance. The Company managed to offset lower industrial and commercial sales through increased residential sales. EMA expects competition to increase due to the expansion and transformation of the industry.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of CAD 53.60 (as on 20 August 2020).

Disclaimer

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