CLP HOLDINGS(US:CLPHY)2024-02-26 15:09Financial Data and Key Metrics Changes - The group's operating earnings before fair value movements increased by 33% year-on-year to over HK$10 billion, with total earnings rebounding to HK$6.7 billion from HK$924 million in 2022 [11][31][15] - Capital investment remained healthy at HK$12.8 billion in 2023, with total dividends per share maintained at HK$3.10, the same as last year [12][32] - Net debt decreased to HK$52.3 billion from HK$54.9 billion a year ago, with a net debt to total capital ratio improving to 31.6% [23][23] Business Line Data and Key Metrics Changes - Hong Kong's operating earnings slightly increased to HK$8.8 billion, driven by investments in electricity infrastructure and decarbonization [40] - EnergyAustralia recovered from heavy losses in 2022 to close to break-even in 2023, with significant improvements in its energy segment [18][38] - In India, Apraava Energy's operating earnings rose by 43% to HK$301 million, reflecting strong momentum in its diversified portfolio [20] Market Data and Key Metrics Changes - Energy output declined by 9%, primarily due to exiting the Fangchenggang coal-fired power station and the deconsolidation of Apraava Energy [33] - The average net tariff in Hong Kong fell by 7.4% compared to the previous year, expected to remain competitive with moderate adjustments [56] - The Australian retail market faced intense competition, leading to a slight reduction in customer accounts [33] Company Strategy and Development Direction - The company aims to decarbonize operations while maintaining a reliable and affordable energy system, with a focus on expanding renewable energy and flexible assets [52][82] - The approved 2024-2028 Development Plan includes HK$52.9 billion in capital expenditure to support Hong Kong's economic infrastructure and decarbonization agenda [54][84] - The company is committed to investing in growth opportunities arising from the shift to clean energy and electrification [82] Management's Comments on Operating Environment and Future Outlook - Management highlighted the strong performance amid global economic uncertainty, emphasizing the robustness of diversified energy businesses in the Asia-Pacific region [27] - The company remains focused on operational improvements and financial performance, particularly in EnergyAustralia, while navigating challenges in the retail market [19][38] - Future cash flow generation is expected to normalize, with a focus on maintaining a solid financial position to support business growth [105] Other Important Information - The company has strengthened its greenhouse gas emission intensity target to align with limiting global warming to 1.5 degrees Celsius [7][92] - The transition to net-zero emissions by 2050 remains a core commitment, with plans to phase out coal before 2040 [92] Q&A Session Summary Question: EnergyAustralia's low sales price contracts - Management explained that contracts are progressively forward-sold over a two-year period, with most low-price contracts rolling off in 2023 [66][99] Question: Sustainability of EnergyAustralia's improvement - Management noted that while wholesale prices have softened, forward price curves indicate higher prices compared to the previous energy crisis [68] Question: Return on Tallawarra B gas power station - The station was commissioned in February 2024, and management expects acceptable returns, subject to market conditions [69] Question: Coal supply situation at Mount Piper - Management confirmed stabilization efforts at Springvale and a multi-mine contract to ensure coal supply [71][117] Question: Growth CapEx guidance - Management indicated that the new Development Plan will guide CapEx, with expectations of HK$10 billion to HK$11 billion annually [136] Question: Dividend outlook for 2024 - Management stated that dividends are subject to Board approval, aiming for stability and growth in line with business performance [135]