Is Japan's Tepco coming back from the tsunami abyss?
- Japanese utility Tepco's shares jump 16% on strong Q2 results
- Tepco has been in doldrums after earthquake and tsunami of March 2011
- Still premature to ascertain long-term prospects for Tepco
By Peter Garnry
Our conviction buy list portfolio on Asia Pacific equities was up 2.3% slightly underperforming MSCI Asia Pacific up 2.9% the past week.
The biggest gainer was Tokyo Electric Power Company, the now famous Japanese utility company that owned the nuclear plant Fukushima Daiichi that was hit by the March 2011 earthquake and following tsunami.
Tepco's shares rose 15.9% following better than expected Q2 results announced on October 27.
Japan's March 2011 earthquake left infrastructure and lives devastated along much of the northeastern coast, and significantly impacted Tepco's share price. Photo: Thinkstock
However, management says that the situation is still very uncertain and is not able to make a fiscal year forecast yet as it all depends on nuclear power plant restarts.
Despite improving conditions, the company's credit situation is still very fragile with net debt to 12-month EBITDA at 7.2x which is considerably above a sustainable level for an utility company.
So while things have improved for Tepco, it is still not certain that the company will remain sustainable.