HKEI's Distribution Per Unit In-Line, Remains Overvalued as Distribution to Decline in Fiscal 2019
Our thesis on Hong Kong Electric Investment is unchanged after its fiscal 2019 result. We continue to expect the narrow moat rated utility to generate steady increase in distribution in the medium term. As previously noted, fiscal 2019 distribution will decline as the new Scheme of Control, or SoC, kicks in, which offers a lower rate of return of 8%, relative to 10% under the old SoC. While the calculation of the rate of return was not disclosed, we attribute the reduced return to lower cost of ...HK Electric Investments is an investment trust based in Hong Kong. Co. maintains an investment focus on the power industry. Co.'s operations comprise the generation, transmission, distribution and supply of electricity to Hong Kong Island and Lamma Island. Co. conducts is operations through its principal operating subsidiary, The Hongkong Electric Company (HEC). HEC's power generation facility is the Lamma Power Station which has an aggregate installed capacity of 3,737 megawatt (MW). Co. provides electricity to 575,000 registered customers on Hong Kong Island and Lamma Island.
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