[ET Net News Agency, 5 August 2020] HSBC Global Research lowered its target price for
CLP Holdings Ltd (00002) to HK$86 from HK$95 on the back of higher equity beta and slight
earnings revision. It maintained its "buy" rating.
The research house said visibility for CLP remains strong under the 15-year (ending
2033) Scheme of Control (SoC) with the HK government at a ROA (return on assets) of 8%.
Capex for 2019-23 was approved at HK$52.9bn (+34% over 2014-18), and HSBC estimated that
SoC capex was +11% in 1H.
In the near term, CLP expects the outlook for the retail business to remain challenging
and has cost control programs in place. The company continues to look for renewable energy
projects focusing in the Greater Bay Area, especially those with grid-parity capabilities
to reduce dependence on subsidies.
Despite operations facing some interim challenges, HSBC likes CLP for its defensive
business portfolio, especially Hong Kong which accounts for 65% of earnings with fixed
investment returns and growing assets - enabling progressive dividends. (KL)