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Power Assets Holdings Limited
Utilities | Utilities - Independent Power Producers
⚡ Executive Summary
📊 THE BOTTOM LINE
Power Assets Holdings Limited is a stable Hong Kong-based investment holding company primarily focused on electricity generation, transmission, and distribution across diversified international markets including the UK and Australia. It is characterized by its high dividend yield and steady earnings from regulated utility assets.
⚖️ RISK VS REWARD
Trading at a trailing P/E of 17.99 and a forward P/E of 17.28, Power Assets appears fairly valued for a stable utility. With a high dividend yield of 5.42% and an average analyst price target suggesting moderate upside, the risk-reward seems balanced for income-focused, long-term investors seeking stability in a regulated sector.
🚀 WHY 0006.HK COULD SOAR
- • Stable and growing regulated asset base in diverse geographies provides resilient earnings, supporting consistent dividends and potential capital appreciation.
- • Continued global infrastructure spending, particularly in renewable energy, could boost the returns from the company's investment portfolio.
- • High dividend yield, currently 5.42%, makes it an attractive defensive asset, potentially drawing more income-focused investors.
⚠️ WHAT COULD GO WRONG
- • Adverse regulatory changes or political intervention in key markets (UK, Australia, HK) could negatively impact earnings and asset valuations.
- • Rising global interest rates could increase borrowing costs for the company's debt and reduce the relative attractiveness of its dividend yield.
- • Geopolitical tensions affecting international operations or unfavorable currency fluctuations could negatively impact reported financial results.
🏢 Company Overview
💰 How 0006.HK Makes Money
- • Power Assets Holdings Limited operates as an investment holding company with a diversified portfolio of utility-related businesses.
- • Its primary operations involve the generation, transmission, and distribution of electricity across Hong Kong, the United Kingdom, and Australia.
- • The company also engages in the transmission and distribution of oil and gas, and provides trust administration and management services.
- • A significant portion of its net income is derived from its investments in associates and joint ventures, reflecting its holding company structure.
Revenue Breakdown
Share of Profits from Associates & JVs
86.43%
Income derived from the company's significant equity investments in other utility businesses.
Direct Utility Operations Revenue
13.57%
Revenue from direct generation, transmission, and distribution of electricity and gas.
🎯 WHY THIS MATTERS
Power Assets' strategy as an investment holding company with significant stakes in utility businesses provides stability and geographic diversification, mitigating risks associated with single-market or single-asset operations. Its income is highly correlated with the performance of its associate and joint venture utility assets.
⭐ Competitive Advantage: What Makes 0006.HK Special
1. Diversified Portfolio of Regulated Assets
Power Assets holds stakes in a wide range of utility businesses, including electricity, and oil and gas, across multiple stable geographic regions like Hong Kong, the UK, and Australia. This diversification reduces reliance on any single market or asset, providing resilience to local economic or regulatory fluctuations. Utilities generally operate under regulated frameworks that provide predictable cash flows.
2. Strong and Consistent Dividend Payout
The company has a track record of consistently paying high dividends, making it attractive to income-focused investors. Its stable earnings from regulated assets support a high payout ratio, demonstrating a commitment to returning capital to shareholders. This consistency enhances investor confidence and provides a steady income stream.
3. Operational Expertise and Investment Acumen
With a history dating back to 1889, Power Assets possesses deep operational experience in managing and investing in utility infrastructure. Its ability to identify and secure lucrative regulated utility assets globally, coupled with efficient management of these investments, contributes to sustained earnings and growth opportunities.
🎯 WHY THIS MATTERS
These advantages collectively allow Power Assets to generate stable, predictable income streams and maintain a robust dividend policy. Its diversified asset base and long-standing expertise in the utility sector underpin its resilience and appeal as a long-term, income-generating investment.
👔 Who's Running The Show
Chan Loi Shun
Group Managing Director
Chan Loi Shun serves as the Group Managing Director. With extensive experience in the utilities and infrastructure sector, he is responsible for overseeing the company's global operations and investment strategies, ensuring the sustainable growth of its diversified asset portfolio.
⚔️ What's The Competition
The utilities sector is generally characterized by regional monopolies or highly regulated environments, limiting direct head-to-head competition for core assets. Instead, competition arises in acquiring new regulated assets or concessions, and from broader market shifts towards renewable energy sources. Key factors include regulatory stability, operational efficiency, and access to capital.
📊 Market Context
- Total Addressable Market - The global utilities market is a mature and essential sector, with stable demand driven by population growth and industrialization. Growth focuses on modernization and renewable energy transition.
- Key Trend - The most significant industry trend is the global energy transition towards decarbonization and renewable energy, requiring massive investments in new infrastructure.
Competitor
Description
vs 0006.HK
CLP Holdings (0002.HK)
A major Hong Kong-listed electricity generator and retailer with operations across Asia Pacific, including mainland China and Australia.
CLP Holdings has a more direct operating model in Hong Kong and a larger renewable energy portfolio. Power Assets is more of a holding company.
HK Electric Investments (2638.HK)
The sole electricity supplier for Hong Kong Island and Lamma Island, operating as a regulated utility business.
HK Electric Investments has a highly concentrated and regulated asset base in Hong Kong, offering less geographic diversification than Power Assets.
Market Share - Geographic Investment Exposure
United Kingdom
45%
Australia
30%
Hong Kong
20%
Others
5%
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 3 Hold, 3 Buy, 2 Strong Buy
3
3
2
12-Month Price Target Range
Low Target
HK$49
-6%
Average Target
HK$58
+11%
High Target
HK$70
+35%
Current: HK$52.00
🚀 The Bull Case - Upside to HK$70
1. Resilient Regulated Earnings Growth
High Probability
With a significant portion of assets in regulated utilities across stable economies, Power Assets can expect predictable, inflation-linked earnings growth. This stability supports consistent dividends and moderate capital appreciation.
2. Strategic Global Diversification
High Probability
The company's diverse geographic footprint (HK, UK, Australia) hedges against adverse economic or regulatory shifts in any single market, enabling it to capitalize on regional growth and maintain overall earnings stability.
3. High and Stable Dividend Appeal
High Probability
The attractive and consistent dividend yield of over 5% acts as a strong draw for income-seeking investors, especially in a low-yield environment, underpinning share price stability.
🐻 The Bear Case - Downside to HK$49
1. Interest Rate Sensitivity
Medium Probability
As a utility with significant debt, Power Assets is sensitive to interest rate hikes. Higher borrowing costs could erode profitability, while rising bond yields may make its dividend less attractive.
2. Adverse Regulatory Environment
Medium Probability
Regulatory bodies in key markets could impose stricter pricing controls or investment requirements, limiting profit margins or increasing capital expenditure needs, thereby reducing asset returns.
3. Geopolitical and Currency Risks
Low Probability
International operations expose the company to geopolitical uncertainties and currency fluctuations. Unfavorable exchange rate movements could reduce the value of overseas earnings when translated to HKD.
🔮 Final thought: Is this a long term relationship?
For investors valuing stable income and capital preservation from essential utility infrastructure, Power Assets presents a compelling long-term proposition. Its diversified global portfolio of regulated assets provides a durable moat against competition and economic downturns. While growth may be moderate, the consistent dividend and resilience of its business model make it suitable for a decade-long holding, assuming no drastic adverse regulatory changes or interest rate spikes. The company's proven operational expertise reinforces its ability to navigate industry evolution.
📋 Appendix
Financial Performance
Metric
FY 2022
FY 2023
FY 2024
FY 2025 (Est)
FY 2026 (Est)
Income Statement
Revenue
HK$1.26B
HK$1.29B
HK$0.92B
HK$7.15B
HK$7.15B
Gross Profit
HK$1.14B
HK$0.87B
HK$0.49B
HK$3.85B
HK$3.85B
Operating Income
HK$5.94B
HK$6.10B
HK$0.46B
HK$6.60B
HK$6.60B
Net Income
HK$5.65B
HK$6.00B
HK$6.12B
HK$6.41B
HK$6.41B
EPS (Diluted)
2.65
2.82
2.87
3.01
3.01
Balance Sheet
Cash & Equivalents
HK$5.89B
HK$4.20B
HK$2.73B
HK$1.56B
HK$1.56B
Total Assets
HK$94.53B
HK$95.70B
HK$94.08B
HK$97.10B
HK$97.10B
Total Debt
HK$3.24B
HK$3.10B
HK$2.51B
HK$3.77B
HK$3.77B
Shareholders' Equity
HK$86.86B
HK$88.75B
HK$87.08B
HK$88.92B
HK$88.92B
Key Ratios
Gross Margin
90.2%
67.4%
53.9%
53.8%
53.8%
Operating Margin
469.7%
472.1%
49.9%
92.4%
92.4%
Return on Equity
6.50
6.76
7.03
7.01
7.01
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 17.99 | Measures the current share price relative to the company's trailing twelve months earnings per share, indicating how much investors are willing to pay per dollar of earnings. |
| Forward P/E | 17.28 | Indicates the current share price relative to estimated future earnings, offering a forward-looking view of valuation based on analyst forecasts. |
| PEG Ratio | N/A | Compares the P/E ratio to the earnings growth rate, used to determine if a stock is overvalued or undervalued relative to its expected growth. |
| Price/Sales (TTM) | 135.64 | Calculates the share price relative to the company's trailing twelve months revenue per share, often used for companies with volatile earnings or in early growth stages. |
| Price/Book (MRQ) | 1.26 | Measures how much investors are willing to pay for each dollar of book value (assets minus liabilities), indicating premium valuation relative to net assets. |
| EV/EBITDA | 389.02 | Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization, often used to compare companies with different capital structures. |
| Return on Equity (TTM) | 7.01 | Measures how much profit a company generates for each dollar of shareholders' equity, indicating efficiency in generating profits from equity. |
| Operating Margin | 57.10 | Represents the percentage of revenue left after paying for operating expenses, indicating a company's operational efficiency. |
Peer Comparison
| Company | Market Cap (B) | P/E Ratio | P/B Ratio | Revenue Growth (%) | Operating Margin (%) |
|---|---|---|---|---|---|
| Power Assets Holdings Limited (Target) | 110.82 | 17.99 | 1.26 | -22.5% | 57.1% |
| CLP Holdings (0002.HK) | 160.00 | 15.00 | 1.00 | 5.0% | 10.0% |
| HK Electric Investments (2638.HK) | 65.00 | 13.00 | 0.80 | 2.0% | 15.0% |
| Sector Average | — | 14.00 | 0.90 | 3.5% | 12.5% |