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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$9.65 - $17.18$12.82
Multi-Stage$18.31 - $20.09$19.18
Blended Fair Value$16.00
Current Price$5.73
Upside179.29%
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 Rate6.26%6.26%6.26%
Growth Rate0.34%1.34%2.34%
Fair Value$9.65$12.82$17.18
Upside / Downside68.38%123.82%199.91%

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 Rate6.26%6.26%6.26%
Growth Rate0.34%1.34%2.34%
Year 1 PV (M)5,344.245,397.505,450.76
Year 2 PV (M)5,046.105,147.185,249.26
Year 3 PV (M)4,764.594,908.465,055.21
Year 4 PV (M)4,498.784,680.824,868.33
Year 5 PV (M)4,247.814,463.744,688.36
PV of Terminal Value (M)137,890.91144,900.26152,191.80
Equity Value (M)161,792.44169,497.96177,503.71
Shares Outstanding (M)8,836.208,836.208,836.20
Fair Value$18.31$19.18$20.09
Upside / Downside219.55%234.77%250.58%

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