Power Assets 1H14 results fall short of sunny forecasts of analysts

Reason could be UK business’ lower growth.

Power Asset’s (PA) 1H14 results are mostly in line with market expectations, but lower than optimistic forecasts by Maybank Kim Eng.

According to a research note from Maybank Kim Eng, PA has recommended an interim dividend of HKD0.67/share (HKD0.65 in 1H13), better than the expectation. Maybank Kim Eng forecasts FY14E dividend yield will be 3.6%.

Meanwhile, the report noted that the lower than Maybank Kim Eng’s expected results could possibly be mainly due to the lower growth for its UK business.

Here’s more from Maybank Kim Eng:

However, we believe the main driver to the stock remains the progress of overseas expansion as it holds around HKD64b cash.

PA has said it will focus on stable, well-regulated power and gas markets, such as Australia, North America, the UK and continental Europe.

We believe electricity (T&D) or gas distribution businesses in both Australia and Europe with a regulated return (driven by regulated asset base x WACC) will be PA’s preference.

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