Amidst a backdrop of mixed global economic signals, the Hong Kong market has shown resilience with the Hang Seng Index posting modest gains during a holiday-shortened week. This context sets the stage for exploring dividend stocks like China Resources Gas Group, which can offer investors potential stability and steady income streams in uncertain times.
Overview: China Resources Gas Group Limited operates as an investment holding company primarily involved in the distribution of natural and liquefied gas, as well as the connection of gas pipelines, with a market capitalization of approximately HK$68.15 billion.
Operations: China Resources Gas Group Limited generates revenue through various segments including HK$82.63 billion from the sale and distribution of gas fuel and related products (excluding gas stations), HK$10.89 billion from gas connection services, HK$4.04 billion from comprehensive services, and smaller amounts from gas stations and design and construction services.
Dividend Yield: 3.9%
China Resources Gas Group Limited, trading at 50% below our estimate of its fair value, shows potential as a dividend stock despite a history of unstable and volatile dividends. Recently, the company declared a final dividend of 100.69 HK cents per share for the year ended 31 December 2023. With earnings forecast to grow by 7.39% annually and recent strategic agreements to supply energy solutions through its subsidiary, the company's financial outlook may support ongoing dividends. However, with a lower yield (3.93%) compared to top market players and coverage ratios indicating just sufficient earnings and cash flow support (Payout Ratio: 50.2%, Cash Payout Ratio: 53.5%), investors should weigh growth prospects against dividend consistency risks.
Overview: Beijing Jingneng Clean Energy Co., Limited, operating in the People’s Republic of China, focuses on producing energy through gas-fired power, wind power, photovoltaic power, and hydropower with a market capitalization of approximately HK$16.49 billion.
Operations: Beijing Jingneng Clean Energy Co., Limited earns revenue from gas-fired power, wind power, photovoltaic power, and hydropower across various regions in China.
Dividend Yield: 7.5%
Beijing Jingneng Clean Energy offers a dividend yield of 7.51%, slightly lower than the top quartile in Hong Kong's market. Despite a decade of stable dividends, both earnings and cash flows currently do not adequately cover these payments, with a high cash payout ratio of 224.8%. The company's debt level is also notably high. However, it has shown some financial growth with an earnings increase of 9.1% annually over the past five years and is predicted to grow by 18.05% per year moving forward. Recently, at its AGM on June 26, 2024, it approved an increased final dividend payment and reappointed its auditors while also announcing steady first-quarter sales and net income growth compared to the previous year.
Overview: Anhui Expressway Company Limited specializes in constructing, operating, managing, and developing toll roads and associated services in Anhui Province, China, with a market capitalization of HK$22.24 billion.
Operations: Anhui Expressway Company Limited generates revenue primarily through the construction, operation, management, and development of toll roads in Anhui Province.
Dividend Yield: 6.7%
Anhui Expressway has maintained stable dividends over the past decade, with a reasonable payout ratio of 60%, ensuring dividends are well-covered by earnings. However, its dividend yield of 6.75% falls below the top quartile for Hong Kong dividend stocks at 7.99%. While earnings grew by 10.8% last year and are expected to rise by 7.16% annually, dividends aren't fully supported by free cash flow, indicating potential sustainability issues despite a favorable P/E ratio of 9.1x compared to the market's 9.5x.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
