Executive Summary
HK Electric Investments and HK Electric Investments Limited, a vertically integrated power utility, generates, transmits, distributes, and supplies electricity in Hong Kong Island and Lamma Island.
Rewards
Risk Analysis
Dividend of 4.17% is not well covered by earnings or forecast to be in the next 3 years
Snowflake Analysis
Imperfect balance sheet with concerning outlook.
Similar Companies
Share Price & News
How has HK Electric Investments and HK Electric Investments's share price performed over time and what events caused price changes?
Latest Share Price and Events
Stable Share Price: 2638 has not had significant price volatility in the past 3 months.
Market Performance
7 Day Return
-0.9%
2638
-2.0%
HK Electric Utilities
0.6%
HK Market
1 Year Return
0.1%
2638
-19.7%
HK Electric Utilities
-9.9%
HK Market
Return vs Industry: 2638 exceeded the Hong Kong Electric Utilities industry which returned -20.1% over the past year.
Return vs Market: 2638 exceeded the Hong Kong Market which returned -10.4% over the past year.
Shareholder returns
| 2638 | Industry | Market | |
|---|---|---|---|
| 7 Day | -0.9% | -2.0% | 0.6% |
| 30 Day | -4.0% | -11.3% | -3.6% |
| 90 Day | -2.0% | -15.0% | -6.8% |
| 1 Year | 4.4%0.1% | -16.2%-19.7% | -7.0%-9.9% |
| 3 Year | 23.6%6.8% | -11.5%-25.3% | -4.7%-14.3% |
| 5 Year | 89.2%44.9% | 8.5%-16.7% | -15.4%-28.5% |
Price Volatility Vs. Market
How volatile is HK Electric Investments and HK Electric Investments's share price compared to the market and industry in the last 5 years?
Simply Wall St News
4 days ago | Simply Wall St
We Think HK Electric Investments and HK Electric Investments (HKG:2638) Is Taking Some Risk With Its DebtValuation
Is HK Electric Investments and HK Electric Investments undervalued compared to its fair value and its price relative to the market?
29.16x
Price to Earnings (PE) ratio
Share Price vs. Fair Value
Below Fair Value: 2638 (HK$7.68) is trading above our estimate of fair value (HK$4.22)
Significantly Below Fair Value: 2638 is trading above our estimate of fair value.
Price To Earnings Ratio
PE vs Industry: 2638 is poor value based on its PE Ratio (29.2x) compared to the Electric Utilities industry average (12.9x).
PE vs Market: 2638 is poor value based on its PE Ratio (29.2x) compared to the Hong Kong market (9.3x).
Price to Earnings Growth Ratio
PEG Ratio: 2638 is poor value based on its PEG Ratio (4.6x)
Price to Book Ratio
PB vs Industry: 2638 is overvalued based on its PB Ratio (1.4x) compared to the HK Electric Utilities industry average (1x).
Next Steps
Future Growth
How is HK Electric Investments and HK Electric Investments forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?
6.3%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: 2638's forecast earnings growth (6.3% per year) is above the savings rate (1.6%).
Earnings vs Market: 2638's earnings (6.3% per year) are forecast to grow slower than the Hong Kong market (16.5% per year).
High Growth Earnings: 2638's earnings are forecast to grow, but not significantly.
Revenue vs Market: 2638's revenue (3.1% per year) is forecast to grow slower than the Hong Kong market (10.5% per year).
High Growth Revenue: 2638's revenue (3.1% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: 2638's Return on Equity is forecast to be low in 3 years time (5.8%).
Next Steps
Past Performance
How has HK Electric Investments and HK Electric Investments performed over the past 5 years?
-5.1%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: 2638 has high quality earnings.
Growing Profit Margin: 2638's current net profit margins (21.7%) are lower than last year (26.3%).
Past Earnings Growth Analysis
Earnings Trend: 2638's earnings have declined by -5.1% per year over the past 5 years.
Accelerating Growth: 2638's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: 2638 had negative earnings growth (-23.7%) over the past year, making it difficult to compare to the Electric Utilities industry average (-6.6%).
Return on Equity
High ROE: 2638's Return on Equity (4.8%) is considered low.
Next Steps
Financial Health
How is HK Electric Investments and HK Electric Investments's financial position?
Financial Position Analysis
Short Term Liabilities: 2638's short term assets (HK$2.2B) do not cover its short term liabilities (HK$10.2B).
Long Term Liabilities: 2638's short term assets (HK$2.2B) do not cover its long term liabilities (HK$51.0B).
Debt to Equity History and Analysis
Debt Level: 2638's debt to equity ratio (88.8%) is considered high.
Reducing Debt: 2638's debt to equity ratio has reduced from 97.3% to 88.8% over the past 5 years.
Debt Coverage: 2638's debt is not well covered by operating cash flow (15%).
Interest Coverage: 2638's interest payments on its debt are well covered by EBIT (4.3x coverage).
Balance Sheet
Next Steps
Dividend
What is HK Electric Investments and HK Electric Investments's current dividend yield, its reliability and sustainability?
4.17%
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: 2638's dividend (4.17%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.65%).
High Dividend: 2638's dividend (4.17%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.31%).
Stability and Growth of Payments
Stable Dividend: 2638 has been paying a dividend for less than 10 years and during this time payments have been volatile.
Growing Dividend: 2638 has only been paying a dividend for 6 years, and since then payments have fallen.
Current Payout to Shareholders
Dividend Coverage: With its high payout ratio (121.6%), 2638's dividend payments are not well covered by earnings.
Future Payout to Shareholders
Future Dividend Coverage: 2638's dividends in 3 years are not forecast to be well covered by earnings (104% payout ratio).
Next Steps
Management
How experienced are the management team and are they aligned to shareholders interests?
10.6yrs
Average management tenure
CEO
Chi Tin Wan (69yo)
6.42yrs
Tenure
HK$17,810,000
Compensation
Mr. Chi Tin Wan has been the Chief Executive Officer of HK Electric Investments and HK Electric Investments Limited since December 5, 2013 and Executive Director since September 23, 2013. Mr. Wan serves as ...
CEO Compensation Analysis
Compensation vs Market: Chi Tin's total compensation ($USD2.30M) is above average for companies of similar size in the Hong Kong market ($USD602.26K).
Compensation vs Earnings: Chi Tin's compensation has been consistent with company performance over the past year.
Leadership Team
| Name | Position | Tenure | Compensation | Ownership |
|---|---|---|---|---|
| Executive Chairman | 6.42yrs | HK$760.00k | 0.023% HK$15.4m | |
| CEO & Executive Director | 6.42yrs | HK$17.81m | no data | |
| Executive Director & Operations Director | 6.42yrs | HK$6.02m | no data | |
| Executive Director | 7.92yrs | HK$3.25m | no data | |
| Executive Director | 2yrs | HK$3.45m | no data | |
| Chief Financial Officer | 9.67yrs | no data | no data | |
| Group Legal Counsel & Company Secretary | 11.5yrs | no data | no data | |
| General Manager of Public Affairs | 16.83yrs | no data | no data | |
| General Manager of Corporate Development | 43.75yrs | no data | no data | |
| General Manager of Human Resources | 5.92yrs | no data | no data |
10.6yrs
Average Tenure
57yo
Average Age
Experienced Management: 2638's management team is seasoned and experienced (10.6 years average tenure).
Board Members
| Name | Position | Tenure | Compensation | Ownership |
|---|---|---|---|---|
| Executive Chairman | 6.42yrs | HK$760.00k | 0.023% HK$15.4m | |
| CEO & Executive Director | 6.42yrs | HK$17.81m | no data | |
| Executive Director & Operations Director | 6.42yrs | HK$6.02m | no data | |
| Executive Director | 7.92yrs | HK$3.25m | no data | |
| Executive Director | 2yrs | HK$3.45m | no data | |
| Non Executive Director | 6.42yrs | HK$180.00k | 0.000010% HK$6.8k | |
| Deputy Chairman | 5.5yrs | HK$360.00k | no data | |
| Independent Non-Executive Director | 6.42yrs | HK$160.00k | no data | |
| Independent Non-Executive Director | 6.42yrs | HK$170.00k | 0.016% HK$10.7m | |
| Independent Non Executive Director | 6.42yrs | HK$100.00k | no data |
6.4yrs
Average Tenure
65yo
Average Age
Experienced Board: 2638's board of directors are considered experienced (6.4 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
Company Information
HK Electric Investments and HK Electric Investments Limited's company bio, employee growth, exchange listings and data sources
Key Information
- Name: HK Electric Investments and HK Electric Investments Limited
- Ticker: 2638
- Exchange: SEHK
- Founded: 1889
- Industry: Electric Utilities
- Sector: Utilities
- Market Cap: HK$67.862b
- Shares outstanding: 8.84b
- Website: https://www.hkelectric.com
Number of Employees
Location
- HK Electric Investments and HK Electric Investments Limited
- Hongkong Electric Centre
- 44 Kennedy Road
- Hong Kong
- Hong Kong
Listings
| Ticker | Exchange | Primary Security | Security Type | Country | Currency | Listed on |
|---|---|---|---|---|---|---|
| 2638 | SEHK (The Stock Exchange of Hong Kong Ltd.) | Yes | Stapled Securities | HK | HKD | Jan 2014 |
| HKT | DB (Deutsche Boerse AG) | Yes | Stapled Securities | DE | EUR | Jan 2014 |
| HKCV.F | OTCPK (Pink Sheets LLC) | Yes | Stapled Securities | US | USD | Jan 2014 |
| HKVT.Y | OTCPK (Pink Sheets LLC) | SPONSORED ADR | US | USD | Oct 2014 |
Biography
HK Electric Investments and HK Electric Investments Limited, a vertically integrated power utility, generates, transmits, distributes, and supplies electricity in Hong Kong Island and Lamma Island. The company operates 6 coal-fired units, 5 oil-fired gas turbine units, 2 gas-fired combined-cycle units, 1 solar power system, and 1 wind turbine with an installed capacity of 3,237 MW. It also operates a transmission and distribution network of 6,540 kilometers serving 581,000 residential, commercial, and industrial customers. The company was founded in 1889 and is headquartered in Hong Kong, Hong Kong.
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2020/05/30 13:38 |
| End of Day Share Price | 2020/05/29 00:00 |
| Earnings | 2019/12/31 |
| Annual Earnings | 2019/12/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.