HK Stock Market Move | POWER ASSETS (00006) rose nearly 3% as institutions indicated that the company's balance sheet has significantly strengthened following the sale of its related UK business.

POWER ASSETS (00006) rose nearly 3%, as of the time of publication, it has increased by 2.24%, closing at HK $59.35, with a turnover of HK $1.4 billion. On the news front, previously, Cheung Kong Infrastructure, POWER ASSETS, and CK ASSET jointly announced the sale of their entire equity stake in UK POWER NETWORKS (UKPN), a British power grid company, with the buyer being the French energy giant Engie. HSBC Global believes that after the sale of the UK power grid and UK railway projects, the balance sheets of Cheung Kong Infrastructure and POWER ASSETS have been significantly strengthened, creating opportunities for meaningful acquisitions to drive growth and possibly distribute special dividends. The bank estimates that the net cash of Cheung Kong Infrastructure and POWER ASSETS will be equivalent to 24% and 42% of their equity value respectively. HSBC Global continues to point out that inflation-linked adjustments will accelerate the mid-term profit growth of regulated assets, especially in the UK and Australia, where the value of regulated assets and allowable revenue will increase with inflation. With the recent increase in allowed return rates after regulatory resets, profit growth momentum is expected to strengthen. The bank has upgraded the investment rating of POWER ASSETS from "hold" to "buy," with a target price raised from HK $56 to HK $70.