According to a research report released by Daiwa, the performance of Hong Kong and mainland utilities in the first half of the year did not have many surprises, but the overall industry seems to benefit from global recession risks and the reversal of Asia-Pacific interest rate differentials. Daiwa expects Power Assets (00006) and CKI Holdings (01038) to be rated as "buy", and Hong Kong & China Gas (00003) to be rated as "hold", as Power Assets is expected to have a dividend yield of 5.45% in 2024 (higher than 4.84% expected for CKI and 5.48% expected for Hong Kong & China Gas, but with high uncertainty under deleveraging).

The bank pointed out that while the performance of CKI Holdings and Power Assets in the first half of the year is unlikely to have positive growth due to uncertainties in the UK energy network reset and the Northumbrian Water project in the UK and the Enviro project in New Zealand, it remains bullish on both stocks. Daiwa expects Hong Kong utilities to continue to outperform the market in the remaining time of Q3 2024, and they will become a safe haven for investors in the event of emerging global economic recession risks and the reversal of Asia-Pacific interest rate differentials. The bank expects CKI Holdings' net profit for the first half of this year to decrease by 5% to HKD 4 billion YoY, and Power Assets' net profit to decrease by 2% to HKD 2.9 billion YoY due to the UK energy network reset but is expected to be offset by the profit contribution from HK Electric Investments (02638). Hong Kong & China Gas' net profit is expected to increase by 3% to HKD 3.2 billion YoY due to the recovery of mainland business.