POWER ASSETS(HK:00006)2024-09-12 02:03Investment Rating - The report maintains an "Outperform" rating for Power Assets Holdings [3][12]. Core Views - The performance in the first half of 2024 was in line with expectations, with a profit of HK$3.006 billion, a year-on-year increase of 2% [9][12]. - The UK segment showed strong growth, with profits of HK$1.55 billion, up 10.87% year-on-year, primarily due to lower financing costs from inflation-linked debts [10][11]. - The company plans to distribute a dividend of HK$0.78 per share, unchanged from the previous year [9][12]. Financial Performance - Revenue for 2024 is projected to be HK$1.371 billion, with a net profit forecast of HK$6.176 billion [4][12]. - The diluted EPS is expected to increase from HK$2.82 in 2023 to HK$2.90 in 2024 [4][8]. - The company’s gross margin remains stable at 100% across the forecast period [8]. Business Segments - The UK segment's profitability is attributed to companies like UK Power Network and Northern Gas Networks benefiting from reduced financing costs [10]. - The Australian segment reported a profit of HK$601 million, a year-on-year increase of 7.7% [10]. - The Canadian segment experienced a significant decline in revenue due to falling electricity prices [10][11]. Mergers and Acquisitions - The company has expanded its business segments through multiple mergers and acquisitions, including the acquisition of Phoenix Energy in Northern Ireland for HK$7.4 billion [11][12]. - UKPN acquired a 69MW solar power station, and the company plans to jointly acquire 32 wind farm assets in the UK with an estimated investment of HK$3.5 billion [11][12]. Valuation and Target Price - The target price is updated to HK$52.04, corresponding to a 16 times PE ratio for 2024 [12].