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POWER ASSETS HOLDINGS LTD.

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Delayed Hong Kong Stock Exchange  -  04:08 2022-08-16 am EDT
50.20 HKD   +0.10%
08/05UBS Adjusts Power Assets' Price Target to HK$60 From HK$63, Keeps at Buy
MT
08/04Nomura Adjusts Power Assets Holdings' Price Target to HK$52.90 From HK$49, Keeps at Neutral
MT
08/03Power Assets' Profit Climbs in First Half of 2022
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U.K. Regulator Proposes to Cut Returns for Power Distribution Companies -- Update

06/29/2022 | 02:02am EDT

By Jaime Llinares Taboada


The U.K. energy regulator Wednesday proposed lower return allowances for electricity distribution networks for the 2023-2028 regulatory period known as RIIO-ED2, raising criticism from the companies.

Ofgem has published its draft determinations for the five-year cycle starting April 1 that set the amount of money that can be earned by the distribution network operators. The regulator has proposed a total expenditure package of 20.94 billion pounds ($25.52 billion) to be split across the six companies: Electricity North West Ltd., UK Power Networks, Western Power Distribution, Northern Powergrid, SP Energy Networks and Scottish & Southern Electricity Networks.

Ofgem is also proposing a baseline return on equity, or RoE, allowance of 4.75% and a weighted average cost of capital allowance of 3.26% for most companies.

RBC utilities analyst John Musk said in a note that he regards the proposals as a slight positive for the companies, given that expectations were for similar total expenditure, or totex, and a RoE of around 4.6%. Companies had asked for totex of GBP25.2 billion and a RoE of between 5% and 6%, he said. However, totex levels could be revised upward in the final determination in December, and there will be mechanisms that allow greater spending, if required, Mr. Musk said.

"Ofgem is...proposing tough efficiency targets for the networks along with a sharp reduction in their allowed rate of return, meaning less of consumers' money goes to company profits," the regulator said, adding that most consumers could see a small drop in network charges.

The RoE allowance in the current regulatory period is 7.0% for SSE and SP, and 7.4% for WPD, according to Mr. Musk.

The energy watchdog said this plan will also boost grid capacity, improve customer service and resilience to prevent outages, and prepare the way for more greener energy generation.

SSE PLC said that the draft proposal is tough and stretching, and that work is required to ensure the final settlement reflects customer and stakeholder needs.

"This includes further refinement to properly allow for the necessary delivery of improvements in infrastructure and the deployment of technologies required to reach net zero and build network resilience in the context of climate change," SSE said.

National Grid PLC, which acquired WPD last year, said it is working through the detail of the proposals, in particular the proposed reduction in total expenditure across each company.

The Energy Networks Association, which represents the British distribution companies, said the final regulation will need more work for it to be compatible with customers' expectations of an energy system that enables the transition to net-zero greenhouse-gas emissions.

Shares in National Grid at 0743 GMT were up 1.4% at 1,084.5 pence. SSE was up 0.2% at 1,669 pence, and SP owner Iberdrola SA was down 0.1% at 10.16 euros.


Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT


(END) Dow Jones Newswires

06-29-22 0402ET

Stocks mentioned in the article
ChangeLast1st jan.
BERKSHIRE HATHAWAY INC. 1.51% 462498 Delayed Quote.1.00%
IBERDROLA, S.A. 0.92% 10.945 Delayed Quote.4.18%
NATIONAL GRID PLC 1.43% 1168 Delayed Quote.8.65%
POWER ASSETS HOLDINGS LTD. 0.10% 50.2 Delayed Quote.3.19%
SSE PLC 1.33% 1830.5 Delayed Quote.9.55%
All news about POWER ASSETS HOLDINGS LTD.
08/05UBS Adjusts Power Assets' Price Target to HK$60 From HK$63, Keeps at Buy
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08/04Nomura Adjusts Power Assets Holdings' Price Target to HK$52.90 From HK$49, Keeps at Neu..
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08/03Power Assets' Profit Climbs in First Half of 2022
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08/03Assets Holdings Limited Declares Interim Dividend for the Six Months Ended June 30, 202..
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08/03Power Assets Holdings Limited Reports Earnings Results for the Half Year Ended June 30,..
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08/03POWER ASSETS HOLDINGS LTD. : Half-year results
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07/21POWER ASSETS HOLDINGS LTD. : Extraordinary general shareholder meeting
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07/04UK Power Networks Deal Falls Through After Owner Raises Asking Price, FT Reports
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06/29U.K. Regulator Proposes to Cut Returns for Power Distribution Companies -- Update
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06/07UBS Adjusts Power Assets' Price Target to HK$63 From HK$55, Keeps at Buy
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Analyst Recommendations on POWER ASSETS HOLDINGS LTD.
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Financials
Sales 2022 1 290 M 165 M 165 M
Net income 2022 6 660 M 850 M 850 M
Net cash 2022 1 756 M 224 M 224 M
P/E ratio 2022 16,1x
Yield 2022 5,64%
Capitalization 107 B 13 664 M 13 669 M
EV / Sales 2022 81,7x
EV / Sales 2023 80,6x
Nbr of Employees 14
Free-Float 64,0%
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Mean consensus OUTPERFORM
Number of Analysts 11
Last Close Price 50,20 HKD
Average target price 55,86 HKD
Spread / Average Target 11,3%
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Managers and Directors
Chao Chung Tsai Chief Executive Officer & Executive Director
Kee Ham Chan Chief Financial Officer
Kin Ning Fok Executive Director
Yuk Keung Ip Independent Non-Executive Director
Ting Yuk Wu Independent Non-Executive Director
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