Summary of the Conference Call Transcript Industry Overview - The report focuses on the **energy sector** in the **Asia Pacific**, specifically on **gas pipeline, coal haulage, refining, and convenience retail companies** referred to as "energy movers" [1][3][6]. - The **Future of Energy** is identified as one of four key themes for **Morgan Stanley Research** in 2025, highlighting the underperformance of Australian midstream and downstream energy stocks compared to the **ASX200** [3][6]. Company Analysis - **Preferred Companies**: - **Ampol Ltd (ALD)**: Upgraded to **Overweight (OW)** with a projected total shareholder return (TSR) of **33%** [1][22]. - **APA Group (APA)**: Rated **Equal-Weight (EW)** with a TSR estimate of **10.5%** [1][22]. - **Downgraded Companies**: - **Aurizon Holdings (AZJ)**: Downgraded to **Underweight (UW)** with a TSR estimate of **7%** [1][22]. - **Viva Energy Group Ltd (VEA)**: Rated **Equal-Weight (EW)** with a TSR estimate of **35%** [1][22]. Performance Metrics - **Stock Performance**: - APA has shown a total shareholder return of **13.5%** year-to-date (CYTD) in 2025, while ALD has a return of **-10.3%** [5][20]. - AZJ has underperformed with a **1.6%** return CYTD, and VEA has a **-30.4%** return [5][20]. - **Financial Metrics**: - APA's **debt/EBITDA** ratio is **7.0x**, indicating a highly leveraged balance sheet [44]. - ALD has the least leverage with a **debt/EBITDA** of **3.3x** [44]. Investment Framework - The investment framework integrates various metrics including **macro, operating, balance sheet, return, energy transition, and valuation metrics** to rank the energy mover stocks [9][10]. - The report emphasizes the importance of **energy transition** and its impact on stock valuations, with a focus on **Climate Transition Action Plans (CTAPs)** and investment in new energy projects [11][13][32]. Key Risks and Opportunities - **Regulatory Risks**: The upcoming **Australian Federal Election** and reviews of the **Gas Code of Conduct** present uncertainties but could also provide opportunities for the fossil fuel sector [9][43]. - **Tobacco Excise Impact**: ALD and VEA face headwinds from tobacco-related sales due to high excise charges and increased black market activity [43]. Conclusion - The report concludes with a recommendation to favor ALD and APA while being cautious with AZJ and VEA due to their respective challenges and market conditions [22][28]. - The analysis suggests that the energy sector's performance will be influenced by regulatory changes, market dynamics, and the ongoing energy transition [16][43].