Table of Contents
Investment thesis .............................................................................. 4
Top picks and least preferred stocks ........................................................................................5
Sector stance ..................................................................................... 6
Sector analysis................................................................................. 12
Significant sector underperformance in 2009 .........................................................................12
Sector multiples evolution ......................................................................................................15
Sector multiples versus the market ........................................................................................16
Generation sector – driven by power prices ...........................................................................18
Regulated pure plays – not defensive so far ...........................................................................21
Competitive water and waste stocks......................................................................................23
H1 results review....................................................................................................................23
Themes – power markets................................................................ 24
Power prices..........................................................................................................................25
Spreads..................................................................................................................................27
Sector thematic.......................................................................................................................29
UK power – struggling with weak gas prices..........................................................................33
Strong oil YTD, but everything else weak ...............................................................................35
Electricity demand ..................................................................................................................37
Italian & Spanish power markets – tough economic conditions .............................................39
Themes – liquidity debt and disposals .......................................... 41
Debt issuance this year...........................................................................................................41
Disposals ...............................................................................................................................45
Themes - regulation......................................................................... 47
French electricity tariff reform.................................................................................................47
German elections & the nuclear question ...............................................................................50
Renewables – focus on wind..................................................................................................53
UK water – down, but not out.................................................................................................57
Key picks & multiples...................................................................... 60
Top picks and least preferred stocks ......................................................................................60
Most preferred stocks ..................................................................... 67
Least preferred stocks..................................................................... 87