Today I
will recommend you three electricity power houses: HuaDian Power 華電國際 (1071), HuaNeng Power 華能國際 (902) and DaTang Power 大唐發電（991）. All have been giving solid and
consistent dividends for the past four years, with an average yield of 10%
today. All have very low forward p/e, at 4.8x, 5.3x and 6.6x respectively. All
have very low forward p/b, at 0.66x, 0.74x and 0.48x respectively. They are
H-shares and all are substantially cheaper than their A-shares counterparts
listed in Shanghai Stock Exchange. Their A/H premiums are at 60%, 68% and 130%
respectively.
The prices closed at the end of 25 May 2016 at HK$3.83, HK$5.03 and HK$2.00 respectively. All have
been hovering at their respective nadirs and waiting for the ever-mysterious
time for a breakout. And I think now is about the time for the exacting
breakouts to take place due to the following reasons:
(1) They are defensive stocks
whereby all people have to use electricity be it good times or bad times.
(2) The prices have dropped by 25%,
25% and 15% respectively from the beginning of 2016 and value investors would
want to get the solid dividends as the ex-dividend date are drawing near.
(3) During times of uncertainty,
these stocks with steady and high dividends are the best bet. Their dividends
are payable only once a year, so you stand to get on average 10% returns within
a short time.
(4) The charts have all shown that
the turning points are around the corner.
(5) These three companies operate in an oligopoly
environment, where barriers of entry are relatively high.
Superphang
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