00002 Overview

Fuel Price Decline: International fuel prices have decreased, leading to a 2.6% year-over-year drop in average net metering for January 2026, according to CLP HOLDINGS CEO Chiang Tung Keung.

Profit and Dividend Update: CLP HOLDINGS reported a 10.8% year-over-year decline in net profit for 2025, totaling $10.468 billion, while increasing the fourth interim dividend per share to $1.31.

Future Outlook: The company anticipates further reductions in fuel costs for March and plans to monitor geopolitical factors affecting oil prices closely.

Dividend Policy: Chiang emphasized a commitment to maintaining a solid and steadily rising dividend, contingent on business growth and future prospects.

Financial Performance: CLP Holdings reported a revenue of HKD88.018 billion for the year ended December, reflecting a 3.2% decrease year-on-year due to lower generation volumes in Australia.

Earnings Decline: The company's total earnings fell by 10.8% year-on-year to HKD10.468 billion, influenced by one-off items that affected comparability.

Earnings Per Share: The earnings per share (EPS) for CLP Holdings was reported at HKD4.14.

Short Selling Activity: The company experienced short selling amounting to $78.50 million, with a short selling ratio of 34.469%.

JPMorgan's Investment Recommendation: JPMorgan advised investors to take profits on certain Hong Kong utilities, noting their outperformance against the HSI and highlighting uncertainties regarding US rate cuts.

Dividend Yield Concerns: The average dividend yield for Hong Kong utilities is low at 4.4%, with limited potential for increases, leading to downgrades for CLP Holdings and HK & China Gas to Neutral.

Top Pick in Utilities: CKI Holdings was identified as JPMorgan's top pick in the sector, with an increased target price due to potential for dividend growth from its UK and Australian operations.

Market Performance Insights: The outperformance of Hong Kong utilities is attributed to the positive spillover from local banks and developers, despite the overall market uncertainties.

Hong Kong Utilities Sector Performance: The Hong Kong utilities sector has outperformed the Hang Seng Index (HSI) due to favorable macroeconomic factors, a shift in market sentiment towards defensiveness, and increased southbound capital inflows, according to HSBC Research.

Valuation Insights: HSBC Research notes that the current valuations are nearing a four-year peak, and any further revaluation will depend on the specific circumstances of companies that drive earnings and dividends, favoring those with strong fundamentals and free cash flow.

Top Investment Picks: CKI Holdings is highlighted as a top pick due to its regulated utility assets in the UK and Australia, which are resilient to macroeconomic fluctuations, while other companies like HKElectric and CLP Holdings are also recommended for investment.

Stock Ratings and Target Prices: The report includes updated investment ratings and target prices for various stocks in the utilities sector, with CKI Holdings rated as a "Buy" with a target price increase, while others like Power Assets and HK & China Gas are rated as "Hold."

Market Performance: The Hang Seng Index (HSI) fell by 484 points (1.8%) to 26,547, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines of 1.6% and 1.7%, respectively.

Active Heavyweights: Major stocks like Meituan, Ping An, Alibaba, and Tencent saw significant drops, with Meituan down 4.5% and Tencent down 1.7%, amidst high short selling activity.

Notable Declines: Companies such as Zijin Mining and China Life faced substantial losses, with Zijin Mining dropping 5.2% and China Life down 4.9%, reflecting a broader trend of declining stock prices.

Gainers and Losers: Healthyway Inc. experienced a notable increase of 18.8%, while Mongol Mining and Fit Hon Teng saw significant declines of 13.7% and 11.3%, respectively, indicating volatility in the market.

CLP Holdings' Support for EV Roadmap: CLP Holdings' subsidiary, CLPe, is enhancing the high-speed charging network for electric commercial vehicles in support of the Hong Kong government's updated roadmap for electric vehicle adoption.

Focus on Fast Charging Solutions: Managing Director Ringo Ng emphasized the importance of fast charging solutions for medium and heavy commercial vehicles to drive their electrification.

Expansion of Charging Services: CLPe plans to significantly expand its charging services this year, focusing on fast and ultra-fast charging options.

Collaboration with Commercial Partners: The company aims to deepen collaboration with commercial vehicle partners to offer diverse charging solutions, promoting wider electrification in the transport and logistics sectors.