【出版时间及名称】：2009年11月香港电力行业研究报告
        【作者】：星展银行
        【文件格式】：pdf
        【页数】：93
        【目录或简介】：

Defensive with M&A potentials
• A volatile market will bring interest to HK power
companies for their resilient earnings, decent 4-5%
yield and solid balance sheet
• The strong balance sheet may offer M&A excitement in
this otherwise defensive sector. CKI is the prime
beneficiary with cash pile of HK$10b that should be
put in good use for value accretive acquisitions.
• Top pick is CKI for its potential acquisition driven
growth; prefer HKE over CLP due to potential asset
impairment cost for CLP’s Yallourn plant in Australia.
Defensive play with 4-5% yield. HK power companies are
defensive plays with good dividend yield, against average
yield of 2.5% for Hang Seng Index component stocks.
Earnings are highly visible with a regulated return of 10%
on average asset base, rather than power demand,
regulated under the Scheme of Control (SOC) agreement.
CKI is most leveraged to M&A growth. The strong balance
sheet of HK power companies offer potential M&A
excitement in this otherwise defensive sector. They also
have management that has delivered a host of
acquisitions, given the longer operating track record. CKI
is the most leveraged to acquisition driven growth given
its gross cash of HK$10b. We estimate CKI has a financial
headroom of up to HK$38b to deliver value-accretive
acquisitions, with potential sum-of-parts enhancement of
HK$1.65/share. CKI may be eyeing French state-controlled
utility (EDF)’s sale of its electricity distribution arm in the
UK for GBP4b. EDF sale is likely to be concluded in 1Q10.
CKI will announce new acquisitions over the next few
months, with the next one likely to be announced next
week.
Foothold into China’s growing power demand. Given the
cross-border investments into China, HK-listed power
companies can enjoy China’s robust long-term growth.
Nevertheless, this will not provide much of the upside to
earnings in the near term, given the muted earnings
contribution of 10% for HKE, 6% for CLP and 5% for
CKI.
Decent valuation. Valuations of HK power companies are
not excessive at P/Es of between 12-15x. For risk-averse
investors that seek yields, we believe that both CKI and
HKE offer attractive entry point given the widening of
spread between dividend yield and Hong Kong
government yield.