The Zhitong Finance App learned that on August 9, Liu Kai-wah, chief analyst of mainland China and Hong Kong utilities in the UBS Investment Bank Research Department, said that due to expectations of moderate future capital expenses of local power companies in Hong Kong, improved returns on overseas investment, and expected improvements in foreign exchange performance, such stocks have good investment value and are optimistic about Hong Kong's local utility stocks.
Liu Kai-wah pointed out that the Hong Kong Local Power Company will announce a 5-year plan at the end of this year, and its capital expenditure for the next 5 years will be relatively moderate. At the same time, it will increase the company's dividend payout capacity. It is expected that the Hong Kong Local Power Company will increase dividends as soon as next year. In addition, local power companies in Hong Kong also invest in overseas business. Due to energy transition requirements, measures by the British and Australian governments to increase capital expenditure and improve the regulatory environment will increase the return on overseas investment. In terms of exchange rates, the US dollar's interest rate hike has basically peaked. Other foreign currencies, such as the British pound, the Australian dollar, and the Canadian dollar, are expected to improve their performance over the next year, which is also beneficial to overseas cash earnings.
Regarding the recent decline in the new energy sector, Liu Kai-wah said that currently there are cheaper stock options for both Hong Kong stocks and A-shares. The problem of overcapacity in the new energy sector will take time to resolve. If wind power prices rise in the future, it means that overcapacity in the new energy sector may reach an inflection point in the short term; otherwise, it will be difficult to attract capital to buy related stocks.
Furthermore, Liu Kai-wah also believes that in an environment of interest rate hikes, investors prefer undervalued companies with higher cash flow.