CITI expressed on 13 Aug 2008 that the 1H 2008 performance of CLP Holdings Ltd. (0002 HK) met guidelines and reaffirmed the 'sell' rating of the company with a target price of HKD 60.00, although the company's stock is defensive, since the current market valuation of the company is high.

CITI pointed out that the company had seen a decrease in its overseas business in 1H 2008 and asserted that its overseas business will not contribute to its performance, as its new plants in India, Vietnam, Indonesia and Taiwan will only make a profit in 2011 and its renewable energy project will only generate profits after 2013.

Goldman Sachs released a report on 13 Aug 2008, indicating that the net profit of the company in 1H 2008 was HKD 5.61 bln, a decrease of 8% YOY due to a lack of non-recurring gains. Goldman Sachs estimated that the annual profit of the company will increase by 4%, assuming that no changes are made to the profit control agreement, and maintained a 'buy' rating for the company with a target price of HKD 65. According to Goldman Sachs, the estimation on the earnings per share for 2008 and 2009 are respectively adjusted from HKD 4.24 to HKD 4.15 and from HKD 3.45 to HKD 3.50.

Morgan Stanley also expressed on 13 Aug 2008 that it would maintain a 'neutral' rating for the company with a target price of HKD 61.00. Morgan Stanley pointed out that the company's net profit had decreased by 8.5% to HKD 5.61 bln due to lack of non-recurring gains while its core profit increased by 5.2% to HKD 5.01 bln. Since many long-term infrastructure projects of the Hong Kong government are located in areas covered by the company's service network, Morgan Stanley forecasted additional positive surprises from the company rather than from Hong Kong Electric Holdings Ltd. (0006 HK) and a 17.7 P/E for 2009 with a 4% dividend yield.

Source: China Securities Journal

Date: 14 Aug 2008

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