HK Electric Investments & HK Electric Investments (2638) AI Stock Analysis

• Market Cap: $54.70B
• Dividend Yield: 5.17%
• Average Volume (3M): 3.74M
• Price to Earnings (P/E): 17.3
• Beta (1Y): 0.18
• Revenue Growth: 2.58%
• EPS Growth: 1.42%
• Country: HK
• Employees: 1,649
• Sector: Utilities
• Sector Strength: 80
• Industry: Regulated Electric
• EPS (TTM): 0.11
• Shares Outstanding: 8,836,200,000
• 10 Day Avg. Volume: 3,181,378
• 30 Day Avg. Volume: 3,743,102
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.86
• Enterprise Value/Revenue: 8.46
• Enterprise Value/Gross Profit: 15.79
• Enterprise Value/Ebitda: 11.82
• 1Y Price Target: $6.81
• Price Target Upside: 9.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 74 Outperform
• Price Target: HK$6.50 ▲(4.84% Upside)

The company shows strong financial performance with efficient operations and stable margins, although high leverage and negative cash flow growth pose risks. Technical indicators suggest bullish momentum, but overbought signals indicate potential short-term volatility. Valuation is fair with a solid dividend yield.

Positive Factors

Dividends

Stable dividends support valuation and offer an attractive yield for income-oriented investors.

Earnings

Attributable profit climbed 5.7% in 1H despite 3.2% drop in revenue.

Financial Stability

Healthy financials with a stable debt-to-capital ratio and a significant portion of debt on fixed rates, minimizing interest rate risk.

Negative Factors

Operational Reliability

HKEI depends on fuel imports from Australia and Indonesia, and supply disruptions could adversely affect its operational reliability.

Supply Chain Risks

HKEI depends on fuel imports from Australia and Indonesia, with potential operational risks from supply disruptions.

HK Electric Investments & HK Electric Investments Business Overview & Revenue Model

Company Description

HK Electric Investments and HK Electric Investments Limited, an investment holding company, engages in the generation, transmission, and distribution of electricity in Hong Kong Island and Lamma Island. As of December 31, 2021, the company operated 6 coal-fired units, 5 oil-fired gas turbine units, 3 gas-fired combined-cycle units, 1 solar power system, and 1 wind turbine with an installed capacity of 3,617 megawatts. It also operated a transmission and distribution network of 6,734 kilometers; 4,100 substations; and 6,300 transformers, as well as served 584,000 residential, commercial, and industrial customers. The company was founded in 1889 and is headquartered in Hong Kong, Hong Kong.

How the Company Makes Money

HK Electric Investments generates revenue primarily through the sale of electricity to its diverse customer base on Hong Kong Island and Lamma Island. The company's revenue model is based on regulated tariffs, which are approved by the Hong Kong government under the Scheme of Control Agreement, ensuring a stable income stream. Additionally, HK Electric benefits from investments in infrastructure and technology that enhance operational efficiency and service reliability. Significant partnerships with government bodies and adherence to regulatory frameworks also contribute to the company's financial stability and ability to earn consistent returns.

HK Electric Investments & HK Electric Investments Financial Statement Overview

Summary

HK Electric Investments exhibits strong revenue growth and operational efficiency, with robust margins. However, high leverage and negative Free Cash Flow growth present potential risks, although strong cash conversion from operations provides resilience.

Income Statement

The company shows strong and consistent revenue growth with a 5.7% increase in the latest year. Gross Profit Margin and EBIT Margin are robust at 53.6% and 45.5% respectively, indicating efficient operations and cost management. However, a slight decrease in Net Income compared to the previous year suggests potential challenges in net profitability.

Balance Sheet

The Debt-to-Equity Ratio is 1.03, reflecting a significant level of leverage, which is typical in the industry but poses potential risks. The company's Equity Ratio stands at a solid 41.6%, providing some stability in its financial structure. Return on Equity is healthy at 6.3%, indicating effective use of equity capital.

Cash Flow

The Free Cash Flow Growth Rate is negative, indicating challenges in generating excess cash. However, the Operating Cash Flow to Net Income Ratio is strong at 2.05, showing solid cash generation relative to profits. The Free Cash Flow to Net Income Ratio is lower at 0.84, reflecting potential constraints in cash after capital expenditures.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.06B	11.41B	10.79B	11.34B	10.39B
Gross Profit	6.46B	6.02B	5.43B	5.85B	5.05B
EBITDA	8.63B	8.08B	7.55B	7.96B	7.13B
Net Income	3.11B	3.16B	2.95B	2.93B	2.73B
Balance Sheet
Total Assets	118.50B	118.54B	121.00B	114.83B	111.57B
Cash, Cash Equivalents and Short-Term Investments	30.00M	21.00M	325.00M	34.00M	52.00M
Total Debt	50.86B	50.21B	51.21B	46.63B	44.89B
Total Liabilities	69.21B	69.56B	71.67B	66.44B	63.82B
Stockholders Equity	49.29B	48.98B	49.33B	48.39B	47.74B
Cash Flow
Free Cash Flow	2.61B	3.79B	-993.00M	1.36B	1.13B
Operating Cash Flow	6.14B	8.07B	4.77B	6.19B	5.94B
Investing Cash Flow	-3.99B	-4.38B	-6.08B	-5.03B	-5.05B
Financing Cash Flow	-2.38B	-4.04B	1.61B	-1.19B	-1.10B

HK Electric Investments & HK Electric Investments Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2638, the sentiment is Positive. The current price of 6.2 is above the 20-day moving average (MA) of 6.15, above the 50-day MA of 5.96, and above the 200-day MA of 5.41, indicating a bullish trend. The MACD of 0.07 indicates Positive momentum. The RSI at 62.78 is Neutral, neither overbought nor oversold. The STOCH value of 71.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:2638.

HK Electric Investments & HK Electric Investments Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2638	74 Outperform	$54.70B	17.28	6.56%	5.17%	2.58%	1.42%
Sector *	66 Neutral	¥392.83B	13.73	9.30%	2.58%	3.87%	9.47%
CLPHF	―	$21.33B	14.57	10.96%	4.78%	―	―
CRPJF	―	$13.29B	6.13	15.59%	6.28%	―	―
HGKGF	―	$13.81B	17.39	7.05%	5.41%	―	―
HOKCF	―	$17.04B	23.23	9.72%	4.90%	―	―
HUNGF	―	$14.46B	8.81	15.23%	5.03%	―	―

HK Electric Investments & HK Electric Investments Corporate Events

HK Electric to Review 2025 Interim Results in Upcoming Board Meetings

HK Electric Investments & HK Electric Investments Limited has announced that its board meetings will be held on August 12, 2025, to review the interim results for the first half of the year ending June 30, 2025. The meetings will also consider the payment of an interim distribution, which could impact the company’s financial strategy and stakeholder returns.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$7.00 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Announces Unified Board Composition for Trust and Company

HK Electric Investments & HK Electric Investments Limited has announced the composition of its board of directors, which comprises 17 members, ensuring that the same individuals serve on both the Trustee-Manager Board and the Company Board. This governance structure is designed to maintain consistency and alignment between the trust and the company, potentially impacting operational efficiency and stakeholder confidence.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$6.95 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Announces Board and Committee Changes

HK Electric Investments & HK Electric Investments announced changes to its board and sustainability committee effective from July 1, 2025. Mr. KWAN Ying Leung will resign from his roles due to personal health reasons, while Mr. CHOI Wai Man will step in as an Executive Director and a member of the Sustainability Committee. Mr. Choi, who has been with the company since 1981, will also be appointed as Operations Director, overseeing operational activities. These changes are expected to bring fresh leadership and continuity in the company’s strategic operations.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Approves Key Resolutions at Annual General Meeting

HK Electric Investments & HK Electric Investments Limited held its annual general meeting on May 21, 2025, where all proposed resolutions were approved by the holders of Share Stapled Units. Key resolutions included the receipt of financial statements, election of directors, and the appointment of KPMG as the auditor. The successful passing of these resolutions reinforces the company’s governance and operational continuity, potentially impacting its market positioning positively.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Appoints New Nomination Committee Member

HK Electric Investments has announced the appointment of Ms. KOH Poh Wah as a member of its Nomination Committee, effective from May 21, 2025. This strategic appointment is expected to enhance the governance and decision-making processes within the company, potentially impacting its operational efficiency and stakeholder relations.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Investments Aligns Board Composition and Governance Structure

HK Electric Investments has announced that the composition of its Trustee-Manager Board and Company Board will remain identical, with 17 directors serving on both boards. This alignment is mandated by the trust deed, ensuring unified governance. The announcement also details the membership of various board committees, highlighting the company’s commitment to structured and transparent corporate governance.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Investments Strengthens Audit Oversight

HK Electric Investments Manager Limited has outlined the terms of reference for its Audit Committee, which was established in 2013. The committee is composed of non-executive directors, with a majority being independent, and is tasked with overseeing the financial reporting and auditing processes of the company. The audit committee’s structure and procedures are designed to ensure transparency and accountability in financial matters, which is crucial for maintaining investor confidence and regulatory compliance.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Investments Defines Audit Committee Terms

HK Electric Investments Limited has outlined the terms of reference for its Audit Committee, emphasizing the committee’s composition and operational procedures. The committee, composed of non-executive directors with a majority being independent, will meet at least twice a year to oversee the company’s auditing processes, ensuring transparency and accountability in financial reporting, which is crucial for maintaining stakeholder trust.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.

HK Electric Investments Enhances Governance with New Nomination Committee

HK Electric Investments Limited has established a Nomination Committee to ensure adherence to corporate governance standards as per the Hong Kong Stock Exchange’s Listing Rules. The committee, primarily composed of independent non-executive directors, is tasked with reviewing the board’s structure and composition, identifying suitable director candidates, and assessing the independence of directors. This initiative is aimed at enhancing board effectiveness and aligning with the company’s corporate strategy, thereby promoting shareholder value.

The most recent analyst rating on (HK:2638) stock is a Buy with a HK$5.80 price target. To see the full list of analyst forecasts on HK Electric Investments & HK Electric Investments stock, see the HK:2638 Stock Forecast page.