CLP Holdings Ltd

00002: XHKG (HKG)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	HK$65.00	Sfpjjrf	Qghcvfb

CLP: Raising Our 2023 Earnings Estimate but Lowering Longer-Term Margin

Lorraine Tan

May 22, 2023

We remain buyers of CLP Holdings after adjusting our earnings forecast assumptions to reflect reduced losses for its Australian coal-fired power generation activities in 2023 and a lowered long-term operating margin. The net impact is a decline in our fair value estimate to HKD 63 from HKD 66, which prices CLP at 1.4 times 2023 price/book and 9.3 times EV/EBITDA, well within its 10-year range. We think the hiccups in 2022 are largely behind CLP, with wholesale prices in Australia and global fuel costs declining. This should allow CLP to grow its dividend payout by 2%-3% annually.

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