PAH's 2022 Earnings Disappoints on Inflation Hedges; FVE Lowered Slightly

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 67% of profit in 2022. 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 impact dividend payouts given PAH's net cash position. We think PAH's dividend is likely to be flat during our five-year projected period.