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.

0944 ET - Centrais Elétricas Brasileiras SA's shares are likely to be volatile as Brazil's government tries to find ways to reverse the electric utility's privatization, said Credit Suisse analysts Carolina Carneiro and Rafael Nagano in a research note. The government sold part of the state's stake in the company under the administration of right-wing former President Jair Bolsonaro, and left-wing President Luiz Inacio Lula da Silva has criticized the sale on multiple occasions. The government is unlikely to be able to reverse the privatization, but efforts to throw out a company bylaw preventing any shareholder from voting more than 10% of total shares will probably roil markets, the analysts said. (jeffrey.lewis@wsj.com)

0844 ET - PetroRecôncavo SA's downside risks are mostly embedded in its share price, said XP Investimentos analysts in a research note. The Brazilian oil junior said Wednesday after the close that its net revenue jumped 172% in 4Q to 776.6 million reais, the equivalent of $148M, while net income soared to BRL408 million from BRL72.3 million a year earlier. Weaker oil prices are an important risk to the share price that's not currently priced in, but lower prices aren't XP's base case, the analysts said. (jeffrey.lewis@wsj.com)

0716 ET - Parkland Corp. will likely keep its refinery business in the fold, despite a call to spin it off by an activist investor amid a stifled stock performance, Ben Isaacson says in a Scotiabank report. Engine Capital's main idea is to shed the Burnaby refinery, which would remove a conglomerate discount that has dragged on Parkland's portfolio, Isaacson says. "This idea is far from new," he adds, noting it's been discussed by the investment community "ad nauseam" but he doesn't expect to hear much more from the company on the topic. Although Isaacson thinks it's a good idea, PKI has already explored this idea in depth, he says, "and still believes as of [now] that the refinery should stay put." (adriano.marchese@wsj.com)

0707 ET - Gulf Keystone Petroleum's pending field-development plan approval is key for future growth, Peel Hunt analysts write in a research note. The oil producer in the Kurdistan region of Iraq guides for gross average production in 2023 of 46,000-52,000 barrels per day, an 11% increase on year at the mid-point. But the expansion of production is subject to a timely approval by the Kurdistan regional government, which will be a key moment and will signal a period of multi-year production growth, the analysts say. Shares are up 3%. (christian.moess@wsj.com)

0402 ET - GAIL (India) stands to benefit from a higher tariff, Motilal Oswal Financial Services analysts say in a research report. India's Petroleum and Natural Gas Regulatory Board has approved a tariff of INR58.6/mmBtu for GAIL's integrated natural gas pipeline, effective April 1, the analysts note. This would compare with roughly INR43/mmBtu realized by GAIL for the first nine months of FY 2023, they add. Motilal Oswal raises its FY 2024 EPS estimate for the Indian natural gas company by 16%. It lifts the stock's target price to INR147.00 from INR127.00 and maintains a buy rating. Shares are 0.1% lower at INR105.30. (ronnie.harui@wsj.com)

2339 ET - Rex International's decision to diversify into unrelated industries may be a concern, UOB Kay Hian analysts Llelleythan Tan and Adrian Loh say in a research note. The oil company is entering the drone and medical-technology sectors, which are unrelated to its core upstream oil-and-gas business, the analysts say. This raises questions about the company's commitment to its oil-and-gas business, they add. Further, Rex eked out a small profit in 2022 despite average oil prices jumping 42%, which is "not the oil price play that we expected," the analysts say. UOB downgrades the stock to sell and cuts its target price to S$0.10 from S$0.45. Shares are 1.6% lower at S$0.13. (justina.lee@wsj.com)

2308 ET - Huaneng Power International's large exposure to thermal power makes the stock unattractive compared with its peers that have a higher market share in the growing renewable-energy field, Citi analysts Pierre Lau and Bella Tian sayin a note. Despite this, the analysts raise Huaneng's 2023 net profit estimates by 6.0%, mainly due to lower fuel costs. The power company's electricity sales via market-based tariffs could also remain flat this year, they note. Citi raises its target price on Huaneng's H-shares to HK$3.20 from HK$3.00 to factor in the lower fuel costs, but maintains its sell rating. Shares fall 1.7% to HK$4.06. (yiwei.wong@wsj.com)

1225 ET - E.ON could see some upside to its current share price over the coming months as it looks well-positioned with leverage and debt risks under control, analysts at JPMorgan say in a research note. The U.S. bank upgrades its adjusted earnings per share estimates for the German company by 12.9% to EUR0.97 a share for 2023 and by 9.8% to EUR0.96 a share for 2027. "E.ON presented a strong set of FY22 results. Yet beyond 2022 resilience, it is the acceleration in the networks and EIS [energy infrastructure solutions] at stable leverage and the recovery in supply margins which support a solid guidance for both 2023 and 2027," the analysts say, upgrading the stock to overweight from neutral. (giulia.petroni@wsj.com)

(END) Dow Jones Newswires

March 23, 2023 12:20 ET (16:20 GMT)

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