State Grid International Development Ltd.

Overview Key strengths Key risks Improving leverage on robust cash flow and sustainable capital expenditure (capex) Increasing geopolitical uncertainties that raise risks for business operations and expansion abroad. Large and diversified portfolio comprising mostly regulated utility assets. Still-heavy interest cost and potential preferred share redemption that constrain leverage improvement. Strong support from parent and government in strategy, operations, and funding access. Execution risks of increasing greenfield developments. We expect the company to focus more on greenfield project developments via its existing subsidiaries. For example, SGBH will build a new ultra-high voltage (UHV) transmission line in northeast Brazil, which will cost BRL20 billion in total and generate about Brazilean real (BRL) 2 billion revenue per year after commission in 2029. We

...State Grid International Development Ltd.'s (SGID) leverage ratios could withstand its expanding investments in Brazil. We expect the company to focus more on greenfield project developments via its existing subsidiaries. For example, SGBH will build a new ultra-high voltage (UHV) transmission line in northeast Brazil, which will cost BRL20 billion in total and generate about Brazilean real (BRL) 2 billion revenue per year after commission in 2029. We expect SGID's capex to expand to HK$16 billion¡HK$22 billion in 2024-2025 from HK$15 billion in 2022. Growth will be primary driven by building new power transmission assets in Brazil. CPFL's spending will see a mild increase, while maintenance capex in Australia and Chile will remain largely stable....

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