Lowering PAH's FVE, We Think Meaningful Investments Are Challenging, ESG Risks Are Manageable

Power Assets Holdings, or PAH, in the absence of acquisitions, is likely to see a stable share price, supported by a sustained dividend payout. PAH’s key utility assets include U.K.-based power and gas networks as well as Australian utility distribution companies. Together, the U.K. and Australian assets made up more than 70% of profit and around 33% of cash flow in 2020. As a result, PAH’s earnings and fair value estimates are sensitive to currency fluctuations. A weaker GBP has impeded earnings gains; however, we don’t think the lower translated income will materially impede dividend payouts given PAH's net cash position. We think PAH will be able to maintain its 2020 DPS of HKD 2.81.