Company Reports

CLP’s main priority is efficiently operating and expanding its core Hong Kong-regulated utility, which generates attractive risk-adjusted returns. Its next most pressing obligation is to maintain or increase dividends, followed by investing in foreign markets. It also has an overarching focus on decarbonizing its portfolio by selling or retiring coal-fired power stations and adding nuclear, renewables, and battery storage.

CLP's first-half 2026 underlying net income increased 9% to HKD 5.6 billion on stronger performances across all geographies and corporate cost reductions. Dividends were flat at HKD 1.26 per share.

CLP’s main priority is efficiently operating and expanding its core Hong Kong-regulated utility, which generates attractive risk-adjusted returns. Its next most pressing obligation is to maintain or increase dividends, followed by investing in foreign markets. It also has an overarching focus on decarbonizing its portfolio by selling or retiring coal-fired power stations and adding nuclear, renewables, and battery storage.

CLP Holdings’ Hong Kong electricity sales rose 3% year on year in the first quarter of 2026, driven by stronger demand across most sectors amid improving economic conditions. Electricity consumption by data centers increased 11% amid rising artificial intelligence and digital services activity.

CLP’s main priority is efficiently operating and expanding its core Hong Kong regulated utility, which generates attractive risk-adjusted returns. Its next most pressing obligation is to maintain or increase dividends, followed by investing in foreign markets. It also has an overarching focus on decarbonizing its portfolio by selling or retiring coal-fired power stations and adding nuclear, renewables, and battery storage.

CLP Holdings' 2025 adjusted net profit after tax was flat at HKD 10.6 billion as modest growth in the Hong Kong utility and lower corporate costs offset weaker performance in other markets. Dividends increased 2% to HKD 3.20 per share.

CLP Holdings' Hong Kong business saw electricity demand in the nine months to September 2025 down 1.8% on the same period last year, mainly because of cooler weather.

CLP’s main priority is efficiently operating and expanding its core Hong Kong regulated utility, which generates attractive risk-adjusted returns. Its next most pressing obligation is to maintain or increase dividends, followed by investing in foreign markets. It also has an overarching focus on decarbonizing its portfolio by selling or retiring coal-fired power stations and adding nuclear, renewables, and battery storage.

CLP Holdings' first-half 2025 adjusted net income fell by 8% to HKD 5.2 billion as growth at the Hong Kong-regulated utility was offset by weaker performances in foreign markets. First-half dividends were flat at HKD 1.26 per share.

We transfer coverage of CLP Holdings to a new analyst. CLP is the larger of the two electric utility companies in Hong Kong, serving 80% of the territory’s population. It also owns generation and energy retail assets in Australia and generation assets in China, India, Taiwan, and Southeast Asia.

Over the next several years, we expect CLP to continue to sell or retire its coal-fired power plants and add renewable power plants and energy storage units to its portfolio. As of the end of 2024, CLP has more than 22 gigawatts in installed capacity. It plans to double its noncarbon capacity in China and India by 2029, which should help mitigate the shutdown and sales of its fossil fuel power plants. In the meantime, we expect CLP’s earnings and cash flow to continue to be underpinned by its integrated power activities in Hong Kong, which make up more than 60% of net profit.

CLP is in the process of transitioning its integrated power portfolio to be focused on renewable generation and related services. Over the next several years, we expect CLP to continue to sell or retire its coal-fired power plants and add renewable power plants and energy storage units to its portfolio. As of the end of 2024, CLP has more than 22 gigawatts in installed capacity. It plans to double its noncarbon capacity in China and India by 2029, which should help mitigate the shutdown and sales of its fossil fuel power plants.

CLP's 2024 net profit of HKD 11.742 billion reflects a rebound from a low base in 2023 and the 1.6% rise in dividends, and the stronger growth outlook led to a positive share price reaction.

CKI Holdings and Power Assets Holdings outperformed in 2024, with shares gaining 34% and 20%, respectively, while CLP was flat, versus our Hong Kong and China utility sector average gain of 10%.

CLP is in the process of transitioning its integrated power portfolio to be focused on renewable generation and related services. Over the next several years, we expect CLP to continue to sell or retire its coal-fired power plants and add renewable power plants and energy storage units to its portfolio. As of the end of 2023, CLP has an effective installed capacity of around 17 gigawatts. We anticipate that adding renewable plants may lag the exit from the coal-fired plants, so CLP’s generating capacity may shrink before building up.

CLP's first-half 2024 profit performance is largely within our expectations, and we only make minor adjustments to our estimates. The changes are negligible and our fair value estimate for CLP rises to HKD 64 from HKD 63 mainly due to the rolling of our discounted cash flow value. Our fair value estimate prices CLP at 1.4 times price/book and 7.8 times EV/EBITDA, both of which are within its historical range. CLP's share price has outperformed since June and particularly against the recent market volatility given its stable earnings and decent dividend yield of around 4.5%. We now think the shares are slightly overvalued. Interim dividend of HKD 0.63 is unchanged from 2023 level and in line with our assumed unchanged dividend for full-year 2024.

CLP is in the process of transitioning its integrated power portfolio to be focused on renewable generation and related services. Over the next several years, we expect CLP to continue to sell or retire its coal-fired power plants and add renewable power plants and energy storage units to its portfolio. As of the end of 2023, CLP has an effective installed capacity of around 17 gigawatts. We anticipate that adding renewable plants may lag the exit from the coal-fired plants, so CLP’s generating capacity may shrink before building up.

We keep our fair value estimate for CLP Holdings at HKD 63 per share after raising our five-year profit outlook, but with lower income after 2028. We factor in a pickup in near-term growth in China profit contributions as renewable generation capacity is added, but we also increase the impact from the scheduled 2028 decommissioning of its 1,480 megawatt Yallourn coal-fired power plant to its Australian contributions. However, this has a limited impact on our valuation as we expect annual free cash flow to remain at HKD 10 billion-HKD 12 billion, similar to that seen in 2016-20. We think CLP is fairly valued, given its present outlook. Our valuation prices CLP at 12.5 times 2024 price/earnings and 1.4 times price/book, close to the average of its historical range.

CLP is in the process of transitioning its integrated power portfolio to be focused on renewable generation and related services. Over the next several years, we expect CLP to continue to sell or retire its coal-fired power plants and add renewable power plants and energy storage units to its portfolio. As of the end of 2023, CLP has an effective installed capacity of around 17 gigawatts. We anticipate that adding renewable plants may lag the exit from the coal-fired plants, so CLP’s generating capacity may shrink before building up.

We maintain our fair value estimate of HKD 63 for CLP Holdings following 2023 earnings largely within our and market expectations. CLP had recently warned that it would write off HKD 5.9 billion of its Australian retail energy business. Hence, the 2023 net profit of HKD 6.65 billion was well within CLP's guidance and our forecast. Our bottom-line estimates through 2027 have changed little. We think CLP is fairly valued at the current share price, trading on 12.8 times 2024 price/earnings and 1.5 times price/book. The dividend is unchanged at HKD 3.10 per share, representing a 5% dividend yield.