UBS: Positive outlook on Hong Kong utility stocks, with CKI HOLDINGS as the top pick
UBS released a research report stating that despite the recent easing of tariffs between China and the United States, as well as the rekindled expectations of interest rate cuts by the Federal Reserve in the second half of the year, global uncertainty remains persistent. The bank maintains a positive outlook on Hong Kong utility stocks. Its industry preference is CKI HOLDINGS, based on its attractive 5% yield and significant exposure to overseas assets, with a target price of HKD 73 and a "Buy" rating. Following that are POWER ASSETS, CLP HOLDINGS, and HKELECTRIC-SS, with target prices of HKD 70, HKD 74, and HKD 6 (previously HKD 5.8), all rated as "Buy." The report indicates that utility stocks are supported by the prolonged high yields of U.S. Treasury bonds and interest rates, along with a weaker U.S. dollar and strong fundamental growth; the sector's dividend yield is approximately 100 basis points higher than that of the U.S. 10-year Treasury, enhancing its defensive appeal. Additionally, the weaker U.S. dollar benefits the utility sector, especially CKI HOLDINGS and POWER ASSETS, which have substantial overseas operations. The long-term growth of the group's overseas business enhances earnings visibility and the sustainability of dividends
According to the Zhitong Finance APP, UBS has released a research report stating that despite the recent easing of tariffs between China and the United States, as well as the renewed expectations for interest rate cuts by the Federal Reserve in the second half of the year, global uncertainty remains persistent. The bank maintains a positive outlook on Hong Kong utility stocks. Its top industry pick is CKI Holdings (01038), based on its attractive 5% yield and significant exposure to overseas assets, with a target price of HKD 73 and a "Buy" rating. Following that are Power Assets Holdings (00006), CLP Holdings (00002), and HKELECTRIC-SS (02638), with target prices of HKD 70, HKD 74, and HKD 6 (previously HKD 5.8), all rated as "Buy."
The report indicates that utility stocks are supported by the prolonged high yields of U.S. Treasury bonds and interest rates, along with a weaker U.S. dollar and strong fundamental growth. The sector's dividend yield is approximately 100 basis points higher than that of the U.S. 10-year Treasury bonds, enhancing its defensive appeal. Additionally, the weaker U.S. dollar benefits the utility sector, especially CKI Holdings and Power Assets Holdings, which have substantial overseas operations. The long-term growth of the group's overseas business enhances earnings visibility and the sustainability of dividends
