Ge Long Hui·2026-03-19 21:42Core Viewpoint - The company reported a revenue of HKD 771 million for 2025, a year-on-year decrease of 16.1%, primarily due to a reduction in interest income from loans to joint ventures [1] - The net profit attributable to shareholders was HKD 6.236 billion, reflecting a year-on-year increase of 1.9%, which is in line with expectations [1] - The company maintains a "buy" rating, supported by strong risk resilience and upcoming opportunities for return rate adjustments in 2026 [1] Financial Performance - The company declared a dividend per share (DPS) of HKD 2.82 for 2025, unchanged from 2024, with a dividend yield of 4.5% [1] - Total dividends for the year amounted to HKD 6.01 billion, representing 96% of net profit attributable to shareholders [1] Regional Contributions - The Australian business contributed a profit of HKD 1.461 billion in 2025, up 4% year-on-year, driven by regulatory changes allowing a return rate increase [2] - The Hong Kong business generated a profit of HKD 1.051 billion, reflecting a 1% year-on-year increase, supported by capital expenditure investments [2] - The UK business's profit contribution was HKD 3.210 billion, remaining stable year-on-year, with new acquisitions contributing to overall performance [2] Regulatory Changes and Future Outlook - Several regulated assets are expected to enter new regulatory periods in 2026, which will likely enhance return rates and support future earnings growth [3] - Specific regulatory approvals have been granted, allowing for return rate increases in various regions, including a 0.83% increase for Northumbrian Water and a 1.49% increase for Northern Gas Networks [3] Profit Forecast and Valuation - The company anticipates net profits of HKD 7.159 billion, HKD 7.264 billion, and HKD 7.561 billion for 2026-2028, reflecting increases from previous estimates [4] - The expected profit contribution from the completed sale of UK Rails is approximately HKD 300 million [4] - The target price for the company is set at HKD 77.60, based on a price-to-book ratio of 1.80x, reflecting confidence in the company's business model and growth potential [4]