UBS::: Asia Utilities Alpha Preferences 􀂄 Lanco Most Preferred; Adani Power Least preferred.

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Asia Utilities
A lpha Preferences
􀂄 Adding KEPCO to Most Preferred
Following government plans to announce long-term roadmap to rationalize
electricity prices in Korea in June, fuel cost pass-through scheme will start from
July 1 as planned. By June, we should begin to see more details on the tariff hike
which means KEPCO is in the progress to realize its re-rating story. Conviction on
this long awaited tariff hike possibility now is larger than ever. The recent weak
share performance makes the stock even more attractive in our view in addition to
the strong catalyst on tariff hike. We expect the tariff hike to contribute
significantly to KEPCO’s earnings stability and allow KEPCO to earn a fair rate of
return.
􀂄 Reiteration on our Most and Least preferred
Our current Most preferred list contains China Gas, Datang Corp Renewable
Power, Lanco and KEPCO. China Resources Gas, China Longyuan and Adani
Power remain on our Least preferred.