Elevator Pitch
Hong Kong-listed HK Electric Investments Limited (HKCVF, HKVTY, 2638:HK) currently trades at 28.8 times consensus forward FY2020 P/E and offers a consensus forward FY2020 distribution yield of 4.0%. I assign a "Neutral" rating to HK Electric.
On one hand, I like the company for its status as a regulated monopoly with significant earnings visibility, based on a 15-year Scheme of Control Agreement with the HKSAR government permitting an 8% return on average net fixed assets. Looking ahead, a recovery in HK Electric's distribution payout back to the 2018 level is