Power Assets Holdings Earnings: Improving Currency and Inflation Factors To Lift Outlook

With first-half performance tracking our full-year estimate, we make minimal change to our earnings forecast for Power Asset Holdings, or PAH, maintaining our fair value estimate at HKD 48. We think the market may be disappointed that PAH’s first-half 2023 earnings of HKD 2.96 billion is up a subdued 3% year on year, but we expect a stronger second-half performance with currency tailwinds to help. We maintain our view that 2023 net profit will be around HKD 6.0 billion leading to EPS growth of 6.9%. Interim dividend is unchanged, as expected. We think PAH remains relatively attractive, trading at around a 19% discount to our fair value estimate and on a forward dividend yield of 7%.