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HK Electric Investments and HK Electric Investments Limited (2638.HK)

Company Dividend Discount ModelIndustry: Regulated ElectricSector: Utilities

Valuation Snapshot

Stable Growth$9.62 - $17.11$12.78
Multi-Stage$18.21 - $19.98$19.08
Blended Fair Value$15.93
Current Price$5.73
Upside177.97%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-2.34%6.84%0.320.320.320.320.320.360.400.400.400.40
YoY Growth--0.00%0.00%0.00%0.00%-11.17%-9.95%0.00%0.00%0.60%140.73%
Dividend Yield--6.04%6.67%6.19%4.19%4.20%4.69%5.07%5.60%6.26%6.12%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)6,286.00
(-) Cash Dividends Paid (M)5,660.00
(=) Cash Retained (M)626.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1,257.20785.75471.45
Cash Retained (M)626.00626.00626.00
(-) Cash Required (M)-1,257.20-785.75-471.45
(=) Excess Retained (M)-631.20-159.75154.55
(/) Shares Outstanding (M)8,836.208,836.208,836.20
(=) Excess Retained per Share-0.07-0.020.02
LTM Dividend per Share0.640.640.64
(+) Excess Retained per Share-0.07-0.020.02
(=) Adjusted Dividend0.570.620.66
WACC / Discount Rate6.28%6.28%6.28%
Growth Rate0.34%1.34%2.34%
Fair Value$9.62$12.78$17.11
Upside / Downside67.87%123.00%198.54%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)6,286.006,370.386,455.886,542.546,630.366,719.366,920.94
Payout Ratio90.04%90.03%90.02%90.02%90.01%90.00%92.50%
Projected Dividends (M)5,660.005,735.455,811.905,889.375,967.876,047.426,401.87

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate6.28%6.28%6.28%
Growth Rate0.34%1.34%2.34%
Year 1 PV (M)5,343.345,396.595,449.84
Year 2 PV (M)5,044.395,145.445,247.48
Year 3 PV (M)4,762.174,905.975,052.64
Year 4 PV (M)4,495.744,677.654,865.03
Year 5 PV (M)4,244.214,459.964,684.39
PV of Terminal Value (M)137,017.90143,982.87151,228.25
Equity Value (M)160,907.75168,568.47176,527.62
Shares Outstanding (M)8,836.208,836.208,836.20
Fair Value$18.21$19.08$19.98
Upside / Downside217.80%232.93%248.65%

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