Ge Long Hui·2026-03-18 02:46Group 1 - The core viewpoint of the report indicates that Hongkong Electric's profit attributable to unit holders is expected to grow by 1.2% year-on-year to HKD 3.149 billion in 2025, which is 3.4% lower than market expectations [1] - The slight miss in earnings expectations is attributed to a 7.9% year-on-year increase in direct costs, reaching HKD 6.041 billion, which exceeded forecasts [1] - Long-term profitability is expected to grow moderately due to the expansion of regulated asset base, leading to a regulated return on assets of 8% [1] Group 2 - The final dividend remains flat year-on-year at HKD 0.1609 per share, aligning with the bank's expectations [1] - The bank maintains a "neutral" rating on Hongkong Electric, forecasting a sustainable dividend yield of 4.7% from 2026 to 2028 [1] - The 4.7% dividend yield appears less attractive, being only 0.5 percentage points higher than the yield on 10-year U.S. Treasury bonds, indicating a narrowing spread [1] Group 3 - Due to increased direct costs, the bank has lowered its forecast for net profit in 2025 and 2026 by 1.7% to 4.8% [1] - The target price for Hongkong Electric has been adjusted from HKD 6.6 to HKD 7 [1]