Currency Headwinds Will Weigh for Longer on Power Assets Holdings

Power Assets Holdings, or PAH, in the absence of acquisitions, is likely to see slow earnings growth and stable cash flow that should maintain its dividend payout. PAH’s key utility assets include U.K.-based power and gas networks as well as Australian utility distribution companies. Together, the U.K. and Australian assets made up 79% of profit in 2021. As a result, PAH’s earnings and fair value estimates are sensitive to currency fluctuations. A weaker GBP has impeded earnings gains; however, we don’t think the lower translated income will materially impede dividend payouts given PAH's near equal cash:debt position. We think PAH's dividend is likely to be flat with only a slight rise possible.