Yamato: POWER ASSETS (00006) first half performance in line with expectations, maintains "outperform" rating, target price raised to 57.8 Hong Kong dollars.

Daiwa released a research report stating that POWER ASSETS (00006) UK operations supported its performance growth in the first half of this year. In addition, the company sold its UK Rails project and is preparing to participate in mergers and acquisitions to drive dividend growth. The bank maintained a rating of outperform for POWER ASSETS, with a 12-month target price raised from HK$55 to HK$57.8. Daiwa predicts that the profit growth of POWER ASSETS in the UK will slightly slow down in the second half of this year. 2024 was a strong year for UK Power Networks (UKPN) in comparison, and Daiwa estimates that POWER ASSETS will be the biggest contributor to profits in its UK operations. In addition, the sale of UK Rails is expected to be confirmed as planned. CKI HOLDINGS (01038) and POWER ASSETS reported that they reached an agreement to sell the UK Rails business in July 2025 and expect to complete the transaction by the end of 2025 after meeting certain conditions. Daiwa raised its profit forecast for POWER ASSETS in 2025 to reflect the expected disposal income (POWER ASSETS owns 10% of the shares), mainly due to the disposal income expected to be realized from the sale of the UK Rails business. Daiwa increased its earnings per share forecast for POWER ASSETS in 2025 by 2%.