20140115-Maybank_KERPL-Journey_to_the_West__Initiate_BUY_20页_851kb

报告摘要

Power Assets Holdings (6 HK) Summary

Core Content

Power Assets Holdings (PA) is a utility company based in Hong Kong with a current share price of HKD59.15 and a market capitalization of USD16.3B. The company is currently trading at a FY14E P/E of 12.1x and P/B of 1.8x. The report initiates a BUY rating with a target price of HKD74, which is 25% above the current price. The report highlights the company's potential for overseas expansion and its strategic move to spin off its Hong Kong Electric (HKE) business to raise cash.

Main Points

Spin-off of HKE: PA plans to spin off HKE, which will result in a significant drop in earnings contribution from Hong Kong, from ~44% to ~29% of total earnings. The HKE Trust is expected to have a market cap between HKD48.2b to HKD55.7b upon listing on 29 January.
Disposal Yield: PA will dispose of approximately 50.1% of its stake in HKE (or 57.6% if the over-allotment option is fully exercised). The distribution yield is expected to be between 6.26% and 7.24%.
Cash Position: After the spin-off, PA could have total cash of at least HKD52.7b, which includes the proceeds from the disposal, repayment of intercompany loans, and payment of HKE loan facility.
Overseas Expansion: The company is well-positioned to expand overseas, especially in Europe, due to the current low interest rate environment, attractive asset prices, and currency depreciation. The low cost of debt and favorable currency movements could make overseas acquisitions more profitable.
NPV Upside: Based on a DCF model, the report estimates an NPV upside of HKD8/share if 60% of the cash proceeds are invested in projects with an ROE of 10%. This is expected to more than offset the earnings loss from the spin-off.
SOTP Valuation: Using a sum-of-the-parts (SOTP) valuation, the target price is set at HKD74. The valuation includes DCF for the HK business and a mix of DCF and EV/EBITDA multiples for other overseas operations.

Key Information

Earnings Projections:
- FY13E core net profit: HKD10,217.8m
- FY14E core net profit: HKD10,561.1m
- FY15E core net profit: HKD11,025.6m
Dividend Yield:
- FY13E and FY14E net DPS: HKD2.45
- FY14E dividend yield: 4.1%
ROE and ROAA:
- FY12 ROE: 16.1%
- FY12 ROAA: 9.9%
Capital Expenditure (Capex):
- Approved capex for HK from 2014-2018: HKD13b
- FY14E SoC earnings: HKD4,499m
- FY15E SoC earnings: HKD4,550m
Market Cap. of HKE:
- Range: HKD48.2b to HKD55.7b
Share Price Performance:
- 1-month return: 0.3%
- 3-month return: -13.1%
- 12-month return: -9.7%
Valuation Table (SOTP):
- HK: Enterprise value HKD78,520m, EV/share HKD36.8, % 50%
- UK: Enterprise value HKD70,196m, EV/share HKD32.9, % 44%
- Australia: Enterprise value HKD19,715m, EV/share HKD9.2, % 12%
- China: Enterprise value HKD4,061m, EV/share HKD1.9, % 3%
- Other: Enterprise value HKD2,485m, EV/share HKD1.2, % 2%
- Less: Net Debt: HKD17,042m, % -11%
- Equity Value: HKD157,935m, % 100%
- Per Share Equity Value: HKD74.0

Financial Metrics

Metric	FY11A	FY12A	FY13E	FY14E	FY15E
Sales (HKD m)	10,201.0	10,415.0	10,831.6	11,319.0	11,828.4
EBITDA (HKD m)	6,730.0	6,951.0	7,055.7	7,273.5	7,527.3
Core Net Profit (HKD m)	9,075.0	9,729.0	10,217.8	10,561.1	11,025.6
Core EPS (HKD)	4.25	4.56	4.79	4.95	5.17
Core EPS Growth (%)	26.1	7.2	5.0	3.4	4.4
Net DPS (HKD)	2.32	2.45	2.45	2.45	2.45
Core P/E (x)	13.9	13.0	12.4	12.0	11.4
P/BV (x)	2.2	2.0	1.9	1.8	1.6
Net Dividend Yield (%)	3.9	4.1	4.1	4.1	4.1
ROAE (%)	15.9	16.1	15.7	15.3	14.9
ROAA (%)	9.7	9.9	9.9	9.9	9.9
EV/EBITDA (x)	20.8	23.0	20.3	19.4	18.4
Net Debt/Equity (%)	30.2	29.3	25.1	20.3	15.8

Peer Comparison

Company	Bloomberg Code	Market Cap (US$m)	Closing Price (LC)	FY13E P/E	FY14E P/E	FY13E P/B	FY14E P/B	DY	FY13E ROE	FY14E ROE
CLP	2 HK	19,565	60.05	16.7	15.0	1.64	1.59	4.12	9.9	10.2
Power Assets*	6 HK	16,500	59.95	12.4	12.4	1.89	1.77	3.87	15.6	14.7
Average	-	-	-	14.6	13.7	1.8	1.7	4.0	12.8	12.5
Huaneng Power	902 HK	11,895	7.41	7.0	7.4	1.24	1.16	6.07	18.8	16.1
Datang Power	991 HK	7,888	3.40	7.8	7.5	0.77	0.71	3.95	10.4	10.2
China Resources Power	836 HK	12,012	19.44	8.7	8.8	1.46	1.30	3.34	17.8	15.5
Huadian Power	1071 HK	3,445	3.27	5.2	6.0	0.83	0.76	5.40	16.7	13.1
China Power International	2380 HK	2,263	2.74	5.4	6.0	0.73	0.68	6.22	14.2	11.9
Average	-	-	-	6.8	7.2	1.0	0.9	5.0	15.6	13.4

Strategic Implications

Diversification: The spin-off will lead to a more geographically diversified portfolio, reducing reliance on the Hong Kong market.
Currency Impact: The depreciation of the Euro and British pound against the HKD could reduce acquisition costs.
Investment Opportunities: The company is expected to look for investment opportunities in Europe and other regions with favorable conditions.
NPV Upside: The report estimates that the NPV upside could be between HKD2.3 to HKD12.6/share depending on the ROE of the projects and the percentage of cash invested.
Dividend Yield: The dividend yield is expected to remain stable at 4.1% for FY14E.

Conclusion

The spin-off of HKE is viewed as a positive move for PA, allowing the company to raise cash and invest in overseas projects. The report highlights the potential for significant NPV upside if the company can achieve a reasonable ROE and invest a substantial portion of the proceeds. The current share price is considered attractive, and the BUY rating is based on the potential for future growth and the strategic advantages of the spin-off.

展开完整摘要