CLP Holdings (0002.HK): 1H26 Earnings Beat but No DPS Rise; Neutral for 4.3% 2026E Yield

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06 Aug 2026 13:04:03 ET │ 23 pages

CLP Holdings (0002.HK)

1H26 Earnings Beat but No DPS Rise; Neutral for 4.3% 2026E Yield

CITI'S TAKE

We keep our Neutral rating on CLP in view of its low earnings risk (84% 1H26

operating profit from HK at fixed 8% ROA). Despite its 1H26 results beat, its

share price upside might be mild as (i) its 4.3% 2026E yield is not high vs.

4.6% 10-year US$ treasury yield; (ii) its 1H26 results beat from improvement

of its Australian performance might not persist in 2H26-1H27E; and (iii)

earnings gap might emerge from Yallourn closure in mid 2028E. We raise our

2026-28E net profits 1-5% mainly for more from Australia and China; our

SOTP TP is +2.5% to HK$80/share. In the HK utility sector, our top pick is

Guangdong Investment with 6.0% 2026E yield.

1H26 earnings beat but DPS flat — CLP’s total earnings were +6.6% yoy to

HK$5,997m in 1H26, 7% above consensus (Bloomberg). We attribute the earnings

beat to unexpected increments from Australia (+33.5% yoy to HK$223m) for

improved retail margins offsetting soft demand and China (+3.3% yoy to HK$899m)

boosted by 6% Rmb/HK$ appreciation. HK was its biggest profit source with

operating earnings +6.0% yoy to HK$4,736m in 1H26, or 84% of company’s total,

secured by SOE regime making fixed 8% ROA. Despite the profit rise, CLP’s 2Q26

and 1H26 DPS were unchanged yoy at HK$0.63 and HK$1.26, respectively. The

company focuses on absolute DPS without fixed payout ratio and added its DPS by

HK$0.05 pa in 2024-25; we assume the same increments pa in 2026-28E.

n

Neutral

Price (06 Aug 26 16:10)

HK$76.30

Target price

HK$80.00↑

from HK$78.00

Expected share price return

4.8%

Expected dividend yield

4.3%

Expected total return

9.1%

Market Cap

HK$192,768M

US$24,576M

Price Performance

(RIC: 0002.HK, BB: 2 HK)

Australian outlook probably tough — We assume earnings of CLP’s Australian retail

customer business to have downside in 2H26-1H27E as the company guides retail

electricity tariffs there to reduce following 2026-27 DMO/VDO and regulatory

reforms towards dynamic pricing. Meanwhile, wholesale energy businesses there

are facing lowering prices amid reduced demand, less volatility as well as more

…