Wang Weijia, Huang Bo, Li Yalin, Kang Qi | Company Research | Results Review | HK Electric Investments SS (02638): Steady Profit Accretion as Capex Converts to Fixed Assets
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Key Views
The interim dividend totaled HK$1,408 million, or 100% of distributable income (DPS 15.94 HK cents). 1H26 capex climbed 12% to HK$1,667 million; average annual capex for 2026–28 is projected at HK$4,729 million, roughly 14% above 2025. Under the Scheme of Control agreement, permitted profit equals 8% of net fixed assets, so capex converting into fixed assets should steadily lift attributable profit, supported by Hong Kong's 2035 zero-carbon energy target. New gas turbines (L13, GT8/GT10, GT9) are slated for phased commissioning from early 2027 through end-2028.
Outlook
Analysts forecast 2026–28 attributable net profit of HK$3.2/3.3/3.4 billion. Key risks: borrowing-cost control and capex deployment falling short of expectations.
Recommended Securities
HK Electric Investments SS (2638 HK): Buy maintained; target price HK$7.84, based on 1.40x 2026E P/B.