Citi estimates that POWER ASSETS may have mergers or special dividends in the next 12 to 18 months, raising the target price to HKD 70

Power Assets (00006.HK) announced its full-year results for the year ending last December 18. Citigroup issued a research report reiterating its "Buy" rating on Power Assets, citing reasons such as the low business risk of the group, with most of its revenue coming from regulated return assets; the substantial sale proceeds of HKD 45 billion or HKD 21.1 per share from the sale of a 40% stake in UK Power Networks, indicating significant hidden value in the group's assets, and the potential for profit growth from mergers and acquisitions.

Citigroup employed a Sum-of-the-Parts (SOTP) valuation method, raising the target price for Power Assets by 19%, from HKD 59 to HKD 70, which includes sales figures for the first half of 2026.

The report also noted that while the group's expected dividend yield of 4.5% for 2026 is not particularly high, there may be room for an increase in the dividend yield if a large merger or acquisition occurs. If no major mergers or acquisitions take place within the next 12 to 18 months, the company may consider issuing a special dividend, similar to the special dividends Power Assets distributed in 2016 to 2017 after divesting Hong Kong Electric Holdings (02638.HK) in 2014