Power Assets profit up
Hong Kong’s second largest power supplier, Power Assets Holdings Ltd, has announced a record 47 percent gain in half-year profit due to faster growth in earnings outside the city.
The power utility, formerly known as Hong Kong Electric Holdings Ltd, said its net income for the six months ended June 30, 2011 rose to HK$4.1 billion or HK$1.9 per share, from HK$2.8 billion, or HK$1.29 per share.
Earnings from the group’s operations outside Hong Kong were HK$2.275 billion in the first half, 133 percent higher than the HK$978 million recorded for the first half of 2010, which also outstripped the HK$1.781 billion profit made in the city, according to a statement to the Hong Kong stock exchange on Wednesday.
“For the first time the proportion of earnings derived from activities outside Hong Kong exceeded earnings from our Hong Kong operations,” Power Assets said in the statement.
The group attributed the outstanding first-half performance to higher earnings from assets in the UK in particular, including Northern Gas Networks, as well as Seabank Power Station and UK Power Networks Ltd, which were both acquired by the group in the second half of 2010.
The profitability of Power Assets’ overseas business could be very impressive to investors, Alvin Chung, associate director at Prudential Brokerage, noted.
“The stock may achieve HK$65 per share or even more during the rest of the year as Power Assets’ business expansion shows no signs of abating,” said Chung, citing the performance of the stock which has gained about HK$12 or 24 percent so far this year.
The blue-chip company closed at HK$60.85 in Hong Kong trading Wednesday, up HK$0.45 or 0.75 percent from a day earlier compared with the 0.13 percent loss on the city’s benchmark Hang Seng Index.
Power Assets supplies power to Hong Kong Island, while Hong Kong’s biggest power producer CLP Holdings supplies power to Kowloon and the New Territories.
Power Assets is “the most defensive Hong Kong utility”, a July 7 JP Morgan report said, as 95 percent of its earnings comes from its regulated assets – a result of Power Assets’ conservative investment approach in which it only acquires utility businesses that can generate stable returns backed by a strong regulatory regime.
The power supplier, which changed its name in February this year as it positions itself beyond Hong Kong as “a global investor”, currently owns investments in a number of markets including the mainland, the UK, Australia, Thailand, Canada and New Zealand.
Compared with the more-than-double gains outside the city, Power Assets’ Hong Kong operations in the first half were basically unchanged at HK$1.781 billion, compared with the HK$1.776 billion gain during the same period last year.
However, profits from its mainland plants could drop as much as 25 percent year-on-year in the first half due to coal price hikes, a report released by Citigroup on June 10 forecast. It estimated a 40 percent profit gain of the group for the first six months of the year.
Power Asset didn’t elaborate on its profit from the mainland in the statement. It only indicated that their power stations in Guangdong province benefited from increased electricity demand while the impact was partly offset by higher coal prices.
The group also recommended an interim dividend of HK$0.62 per share this time, unchanged from last year.
litao@chinadailyhk.com
China Daily
(HK Edition 07/28/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-07/28/content_12996974.htm