Category: Financial Markets
In other coronavirus news, Russia’s overall virus cases have topped 6 million, and Turkey’s infections have tripled since earlier this month.
China, the world’s largest petroleum importer, reported 76 new COVID-19 cases, the most since the end of January, amid a surge of local illnesses in Nanjing, in eastern China.
Floods and a typhoon have wreaked havoc on China’s central and eastern regions.
With robust demand in the United States and forecasts of restricted supply underpinning prices, investors are now looking for direction from the Federal Reserve meeting and reports on US oil inventories.
(Source: Factset)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
We expect high-single-digit growth in utility earnings over the next five years, driven in large part by grid investment at DTE Electric and replacing aging infrastructure at DTE Gas. DTE Electric is also investing heavily in gas power generation and renewable energy to replace its aging coal fleet. We estimate DTE will invest $18.5 billion at its utilities during the next five years in a Michigan regulatory framework that is constructive for investors.
We are less bullish about the earnings contribution from the power and industrial segment as reduced emissions fuel, or REF, earnings decline from the expiration of tax credits. However, we believe new industrial cogeneration projects and renewable natural gas from landfill projects should, for the most part, offset the REF decline. We estimate flat earnings will reduce the segment’s contribution to consolidated earnings from almost 13% in 2021, following the separation of DTM, to less than 10% by 2025.
Financial Strength
DTE’s book debt/capital ratio rose to 61% at 2020 year-end, a significant increase from five years ago when it averaged in the low-50% range. A stable interest coverage ratio during the next five years is expected, with EBITDA/ interest expense over 4 times. On June 24, DTE declared a $0.825 per-share quarterly dividend ($3.30 per-share annualized) on its common stock payable on Oct. 15, 2021, for shareholders of record at the close on Sept. 20, 2021. DTE management has indicated that the DTE dividend plus the DT Midstream dividend will total $4.70-$4.80 per-share annualized starting in the third quarter of 2021. The midpoint of this guidance would represent a 9.4% increase over the previous DTE dividend before the separation of DTM. The current annual DTE dividend of $3.30 per share represents a payout ratio of approximately 60% on our 2021 EPS estimate of $5.51
Bull Says
- Shareholders will receive a dividend increase when the DTE Energy and DT Midstream dividend are combined. It is estimated a 9.4% combined dividend increase, followed by 6% annual increases for DTE from 2022 to 2025.
- Michigan’s aging utility infrastructure needs investment, which will mean regulated growth opportunities for DTE.
- Over the past 10 years, Michigan regulation has been constructive for shareholders and is expected to remain favorable.
Company Profile
DTE Energy owns two regulated utilities in Michigan. DTE Electric serves approximately 2.2 million customers in southeastern Michigan including Detroit. DTE Gas serves 1.3 million customers throughout the state. In addition, DTE has nonutility businesses and investments including energy marketing and trading, renewable natural gas facilities, and on-site industrial energy projects.
(Source: Factset)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
So, what’s the deal?
A job offering for a “Digital Currency and Blockchain Product Lead” was recently posted on Amazon. The individual in charge of the e-commerce giant’s blockchain strategy and product roadmap will be tasked with filling the position.
Following a report from City A.M. on Monday, enthusiasm about Amazon’s digital currency plans reached a fevered pitch. Amazon is “absolutely” preparing up to take Bitcoin payments by the end of the year, according to the British financial journal, and plans to develop its own cryptocurrency by 2022.
Amazon, on the other hand, refuted City A.M.’s assertions, telling Bloomberg that “despite our interest in the industry, the conjecture that has ensued surrounding our precise plans for cryptocurrencies is not true.”
Despite this, Amazon stated that it is keen to learn more about digital currencies and how they might be integrated into its large e-commerce network. The business stated, “We remain committed on investigating what this could look like for people shopping on Amazon.”
So, what’s next?
It would be a game-changer for the crypto business if Amazon accepted Bitcoin and other cryptocurrencies as payment. The action would immediately increase Bitcoin’s legitimacy and usability. As a result, the value of the cryptoasset would most likely increase.
Even if this happens, it will most likely take some time. In the interim, there are numerous dangers to be aware of. For instance, crypto investors should be on the lookout for a possible crackdown on stablecoin issuer Tether, which has piqued authorities’ interest in recent weeks after investors raised concerns about its reserve statements’ lack of clarity.
Source: Factset
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
China’s demand for commodities is expected to weaken in the second half of 2021, according to analysts, but this will be largely offset by stronger demand outside of China and the global shift to a low-carbon economy.
The development of the more virulent Delta strain of coronavirus has hampered mobility and growth forecasts, putting pressure on commodities in recent weeks. However, central banks have signalling more aggressive policy positions, with several announcing a reduction in bond purchases.
The vigourous drive in China to put inflationary pressure on industrial metals prices, such as steel, is a third issue. After the run-up that brought copper and iron ore prices to all-time highs, the situation in the second half will be more unpredictable.
Coal
Spot prices for coking (metallurgical) coal have risen since the start of May, but the CBA analysts believe a peak is building, as some steel product margins are now declining.
However, thermal coal prices have remained high due to supply concerns and seasonal demand from a warmer-than-usual summer in North Asia. Thermal coal prices have climbed thrice since the commencement of the pandemic, according to Longview Economics.
Over 2020, China’s coal power capacity increased by 3%, while additions outside of China totalled just 9GW and retirements were 25GW. While a result, China’s coal capacity continues to expand even as the rest of the world cuts back.
Iron Ore
China’s economic report for June is unlikely to allay fears of slowing growth. As a result, ANZ Bank analysts expect that downward pressure on iron ore prices will intensify.
Despite the fact that the market remains tight, a severe correction is unlikely. While demand outside of China may be able to compensate for some of the downturn, iron ore prices are projected to fall in the second half, albeit the decline will be limited.
Source: Factset
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.