News Hong Kong Property & Finance

Why has CLP (0002) dropped so much? Is it a good buy?

ORIGINAL POST
Posted by Conte_Riccardo_III 11 yrs ago
The title says is all. It's 59.15 today. Now the dividend is about 4.34, which is rather good (Read More). The dividend is distributed 4 times a year. In 2009 the share price only dropped to 52, which is about 12% lower than now (the dividend of three year). Compared to other shares, it seems to be rather good.


I think the government is about to change the law (or already has) and lower the guaranteed profit on assets (but this is anyway only on Hong Kong's assets, and CLP invests in many other countries). Is that the reason the price is dropping? What will be the new guaranteed profit?


Is there anything I should know before buying it?

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COMMENTS
jaswells 11 yrs ago
Limited growth potential/ Highish P/E ratio for sector/ Yield in line with other global utilities providers/ potential for government controls/ rising costs with limited scope to increase profit margins.


Would be my list of reasons!

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OffThePeak 11 yrs ago
They have an involvement in nuclear plants, don't they?

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Conte_Riccardo_III 11 yrs ago
Thank you jaswells and OTP.


"They have an involvement in nuclear plants, don't they?".


Yes. So? They have it for many many years, and the dividend is very high, at 4.3 (paid four times a year). So I wonder why the share price has been dropping by 20% over the last 2 1/2 years (from 73 in Sept. 2011 to 59 now). Is this a good time to buy, or is the drop expected to continue because of something I don't know?

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jaswells 11 yrs ago
I don't theres any nasty surprises lurking with this one, I would just say that as a defensive stock its lost some favour with more bullish speculators of late. As I said b4, the P/E is a better guide to the stock value , of which it is nothing exceptional for the sector.

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Conte_Riccardo_III 11 yrs ago
Yes, the P/E is incredibly high. Thank you for pointing it out. And yet they have a much higher dividend that all competitors with a lower P/E. Why is that? They invest less?


Also, is the fact that the share value hasn't gone up as much as HK Electric for example a bad thing?


Or is it just a less speculative (more boring) stock, which simply provides a good dividend but has little up and down potential (which is actually what I am looking for)?

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traineeinvestor 11 yrs ago
CLP management recently said they expect a significant increase in fuel costs in 2014-2018. Natural gas was expected to double.


FWIW, the last broker's report mentioned on AAStocks (in December) gave a target of $56.30.

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Conte_Riccardo_III 11 yrs ago
Thank you very much!

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jaswells 11 yrs ago
The key difference with HK Electric (or Power Assets, but now actually spun of again in part) and CLP is the fact PA has a corporate strategy to expand its energy business overseas and has acquired various utility interests. As far as I am aware this is less of a medium term objective for CLP so, yes, it is deemed a rather boring stock which is unlikely to go anywhere significant in price for the foreseeable future.

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traineeinvestor 11 yrs ago
Another option if you are interested in a utility stock is CKI (1038). I hold this one.

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Conte_Riccardo_III 11 yrs ago
Thanks! I shall look into those. But I think CLP is also involved overseas, though perhaps less than Power Assets. Overall, CLP is larger than PA, but with a larger presence in HK, I guess it means it's less involved overseas.

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