In a world of near zero interest rates and record low bond yields, investors are in search for high yielding propositions from solid corporations.
What we have here is an exceptional situation of high and stable dividends, a strong recovery in earnings and record low valuations,
BUY China Power International 2380 HK @ 1.53
China Power International Development Limited (CPID), also known as just China Power, is China’s fifth largets electric power company. It was incorporated in Hong Kong in 2004.
State Power Investment Corporation (SPIC) became the new parent company of CPID after CPI Group was merged with another state-owned enterprise.
CPID is one of several Hong Kong listed subsidiaries of five national power generating groups in the Mainland China. CPID is also a red chip company, a term for foreign incorporated listed company with Chinese government background in the Stock Exchange of Hong Kong.
CPID is engaged in developing, constructing, owning, managing and operating large power plants in China. In addition to the coal-fired power business in the start-up stage, the Company has expanded its business into the areas of hydropower, wind power, photovoltaic power, electricity sales and distribution and integrated energy through continuous development over the past 15 years. Various business segments are growing orderly along with the constant expansion of the Group.
As at 31 December 2019, the Group’s total attributable installed capacity was 21,113.2MW, of which attributable installed capacity of clean energy was 7,510.1MW, accounting for 35.57% of all attributable installed capacity.
The company reported its first half 2020 earnings on October 13th and delivered much stronger growth than expected by the consensus of analysts. The company benefits form lower fuel prices and good cost control.
It is expected to maintain a 100 % pay out dividend policy, something that could deliver 13 % Dividend yield in 2020
As can be seen from above, earnings per shares are expected to grow at + 49 % in 2020 and another + 35 % in 2021, something totally out of line with its low 7x Price / earnings ratio and kits historically low Price to book ratio of 0.4 .
Moreover, the annual EBITDA almost equates the total market capitalisation of the company, a very rare occurence.
This is a great time to accumulate this High and Stable Dividend company with strong recovery prospects and a solid handle on China’s economic growth.
Very few companies can offer 9 to 13 % dividend yields while trade at 7 x strong earnings growth and at a deep discount from their book value.
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