＜Research＞JPM Suggests to Start Accumulating Quality Div.-paying Utilities, Upgrades PAH to Overweight

　　JPMorgan suggested in a report that investors could start to accumulate quality dividend-paying utilities amid the current market volatility and the possibility that the US Federal Reserve will cut interest rates for the first time in 4Q24.

　　The broker upgraded its rating on POWER ASSETS (00006.HK) +0.750 (+1.803%) Short selling $5.94M; Ratio 11.590% from Neutral to Overweight, as its yield of around 7%, which is 1 standard deviation above its historical average, is estimated to fall if rate cut expectations rekindled. The broker expected more clarity on the outcome of two of PAH's regulatory assets (SA Power Network and Northumbrian Water) in 2H24, with upside to permitted returns and capital expenditure, which it believed could act as a catalyst for the company's share price.

　　In addition, JPM expected the CK Group to disclose more M&A deals, as management has mentioned that it is looking for more M&A opportunities. Although CKI and PAH have already announced acquisitions of natural gas networks and solar projects in 1H24, the broker forecasted more deals to be announced, and estimated that each completed deal will drive the share price higher.

　　JPM's pecking order is led by PAH and CKI at the same rank, followed by HK & CHINA GAS (00003.HK) +0.150 (+2.586%) Short selling $9.76M; Ratio 18.693% , and finally CLP HOLDINGS (00002.HK) +1.150 (+1.850%) Short selling $14.49M; Ratio 27.576% .

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-06-28 12:25.)

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