Power Assets Interim Profit Hit by Further Non-Cash Tax Charges, Core Performance Healthy

If not for a non-cash deferred tax charge of HKD 551 million, no-moat Power Assets Holdings’, or PAH’s, interim profit would have rebounded 35% year on year. Instead, interim profit of HKD 2,509 million is up just 11%. The charges hit income from U.K. regulated assets but do not impact cash flow contributions during the period. As a result, our fair value estimate for PAH is unchanged at HKD 52. Interim dividends were raised by 1 Hong Kong cent, a small surprise, pointing to a slight rise in full year dividends that we already assumed. We think PAH and its parent CKI Holdings are attractive at their current price points, but CKI has slightly better growth prospects with five-year EPS CAGR at 8.8% versus PAH’s 5.7%. This excludes the potential for incremental profit from bolt-on acquisitions made by CKI’s non-regulated businesses.