Citi: GUANGDONG INV (00270) results in line with expectations; 5.7% dividend yield is the highest among Hong Kong-listed utilities.

Citi issued a research report stating that GUANGDONG INV's (00270) third-quarter 2026 results were broadly in line with the bank's and market expectations. The bank maintained its "Buy" rating and target price of HK$9.5, noting that the expected 2026 dividend yield of 5.7% is attractive and the highest among Hong Kong-listed utilities. GUANGDONG INV's net profit for the first nine months rose 7.3% year-on-year to HK$4.362 billion, of which third-quarter net profit rose 3% year-on-year to HK$1.426 billion. Third-quarter profit growth was mainly driven by higher profits from its mainland China water business. The bank noted that profit before tax for the first nine months rose 7.1% year-on-year to HK$6.683 billion, of which the water business accounted for 83.2%, with profit before tax rising 3.9% year-on-year to HK$5.4 billion; the Dongjiang-Shenzhen Water Supply Project's profit before tax rose 1.3% year-on-year to HK$3.641 billion, while the Hong Kong water group engaged in mainland water supply saw profit before tax rise 9.9% year-on-year to HK$1.759 billion. Property leasing, department store and hotel businesses recorded profit before tax of HK$928 million for the first nine months, up 3.1% year-on-year, contributing 14.3%. The hotel business's profit before tax rose 26.7% year-on-year to HK$87 million, but the share of profit from power plants fell 30.8% year-on-year to HK$123 million, affected by rising coal costs. The company has committed not to cut dividend per share before 2030 and to maintain its payout ratio at 65%, making the dividend yield sustainable. Based on the closing price of HK$8.67 on October 27, the expected share price return is 9.6%, and including dividends, the expected total return is 15.2%.