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HK Electric Investments & HK Electric Investments (HK:2638)
:2638

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

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HK Electric Investments & HK Electric Investments

(OTC:2638)

Rating:68Neutral
Price Target:
HK Electric Investments is solidly positioned in its industry with strong financials, albeit with some leverage and cash flow concerns. The technical analysis suggests moderate upward momentum, while the valuation indicates fair pricing with an attractive dividend yield. These factors collectively contribute to a moderately positive stock score.

HK Electric Investments & HK Electric Investments (2638) vs. iShares MSCI Hong Kong ETF (EWH)

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

Company DescriptionHK 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 MoneyHK Electric Investments & HK Electric Investments (2638) generates revenue primarily through the sale of electricity to its customers on Hong Kong Island and Lamma Island. Its revenue model is based on a regulated return mechanism under the Scheme of Control Agreement (SCA) with the Hong Kong Government, which allows the company to earn a permitted rate of return on its average net fixed assets. This agreement provides a stable and predictable revenue stream. Additionally, the company may engage in various energy-related projects and initiatives, such as renewable energy development and energy efficiency programs, contributing to its overall earnings. However, the core revenue stream remains the regulated electricity business.

HK Electric Investments & HK Electric Investments Financial Statement Overview

Summary
The company exhibits strong revenue growth and operational efficiency, with robust margins. However, high leverage on the balance sheet is a potential risk, and negative Free Cash Flow growth indicates some cash flow challenges, despite strong cash generation from operations.
Income Statement
85
Very Positive
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
70
Positive
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
75
Positive
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 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
12.06B11.41B10.79B11.34B10.39B
Gross Profit
6.46B6.02B5.43B5.85B5.05B
EBIT
5.49B4.98B4.51B4.84B4.14B
EBITDA
8.63B8.08B7.55B7.96B7.13B
Net Income Common Stockholders
3.11B3.16B2.95B2.93B2.73B
Balance SheetCash, Cash Equivalents and Short-Term Investments
30.00M21.00M325.00M34.00M52.00M
Total Assets
118.50B118.54B121.00B114.83B111.57B
Total Debt
50.86B50.21B51.21B46.63B44.89B
Net Debt
50.83B50.19B50.89B46.59B44.84B
Total Liabilities
69.21B69.56B71.67B66.44B63.82B
Stockholders Equity
49.29B48.98B49.33B48.39B47.74B
Cash FlowFree Cash Flow
2.61B3.79B-993.00M1.36B1.13B
Operating Cash Flow
6.14B8.07B4.77B6.19B5.94B
Investing Cash Flow
-3.99B-4.38B-6.08B-5.03B-5.05B
Financing Cash Flow
-2.38B-4.04B1.61B-1.19B-1.10B

HK Electric Investments & HK Electric Investments Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.72
Price Trends
50DMA
5.42
Positive
100DMA
5.29
Positive
200DMA
5.20
Positive
Market Momentum
MACD
0.09
Positive
RSI
63.32
Neutral
STOCH
70.59
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 5.72 is above the 20-day moving average (MA) of 5.64, above the 50-day MA of 5.42, and above the 200-day MA of 5.20, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 63.32 is Neutral, neither overbought nor oversold. The STOCH value of 70.59 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

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
68
Neutral
HK$50.54B16.256.32%5.67%5.71%-1.43%
64
Neutral
$8.53B10.344.24%4.37%4.14%-13.04%
$21.30B14.1611.36%4.79%
$14.05B6.1315.59%5.72%
$13.79B17.616.95%5.52%
$16.19B22.179.72%5.24%
$14.19B9.527.63%4.45%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HK:2638
HK Electric Investments & HK Electric Investments
5.72
1.14
24.78%
CLPHF
CLP Holdings
8.44
0.47
5.90%
CRPJF
China Resources Power Holdings Co
2.33
-0.67
-22.33%
HGKGF
Power Assets Holdings
6.52
1.58
31.98%
HOKCF
Hong Kong & China Gas Co
0.85
0.14
19.72%
HUNGF
Huaneng Power International
0.65
-0.04
-5.80%

HK Electric Investments & HK Electric Investments Corporate Events

HK Electric Approves Key Resolutions at Annual General Meeting
May 21, 2025

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
May 21, 2025

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
May 21, 2025

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
May 21, 2025

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
May 21, 2025

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
May 21, 2025

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.

HK Electric Investments Announces 2025 AGM and Share Issuance Mandate
Apr 16, 2025

HK Electric Investments has announced its Annual General Meeting (AGM) scheduled for May 21, 2025, to be held as a hybrid meeting both in-person and online. The AGM will address ordinary business matters such as reviewing financial statements, re-electing directors, and appointing auditors. Additionally, a special resolution will be considered to grant the company’s directors a mandate to issue additional shares, not exceeding 10% of the current share capital, under specific conditions. This move could potentially impact the company’s capital structure and market positioning, offering flexibility in raising capital and expanding its operations.

HK Electric Advances Sustainability and Infrastructure Resilience in 2024
Mar 18, 2025

In 2024, HK Electric Investments made significant strides in its sustainability efforts by commissioning a new gas-fired generating unit and retiring older coal-fired units, aligning with Hong Kong’s decarbonization goals. The company maintained a high reliability rating and solid financial performance, with a focus on infrastructure resilience and customer service excellence. The ongoing development plan includes further emission reductions and the rollout of smart meters to enhance energy management. These efforts underscore HK Electric’s commitment to providing reliable and environmentally friendly power, while also promoting energy efficiency and supporting electric vehicle infrastructure.

HK Electric Announces Final Dividend for 2024
Mar 18, 2025

HK Electric Investments & HK Electric Investments Limited announced a final cash dividend of HKD 0.1609 per share for the financial year ending December 31, 2024. The ex-dividend date is set for April 9, 2025, and the payment will be made on April 23, 2025. This announcement reflects the company’s ongoing commitment to delivering shareholder value and may impact investor sentiment positively, reinforcing its stable position in the utilities sector.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.