Power Assets’ 2022 Profit Misses; FVE Lowered Slightly to HKD 48

We lower Power Assets Holdings’, or PAH’s, fair value estimate to HKD 48 from HKD 49 due in part to the weakness in associate HK Electric’s, or HKE’s, market value. Although on first glance, 2022 results disappointed, this was mainly due to mark-to-market inflation hedges that dampened United Kingdom-derived contributions. As a result, our cash flow assumptions are largely unchanged pending additional tweaks on the release of its full accounts. We continue to forecast unchanged dividends at PAH of HKD 2.82 annually in our explicit forecast period. PAH currently trades at a relatively attractive 6.5% dividend yield which we think will continue to support its share price.