Daiwa released a research report stating that the UK Water Services Regulatory Authority (Ofwat) has released a draft decision on regulated water assets, and the result of Northumbrian Water, a subsidiary of CKI Holdings (01038), is positive. If NW appeals to Ofwat, it will further boost the bullish trend. It reiterates its belief that CKI's stock price will outperform the market in the third quarter and maintains a "buy" rating.
The report stated that Ofwat initially drafted that NW can raise prices to 460 pounds before 2029-2030, and 415 pounds before 2024-2025. It will receive a subsidy of 5.7 billion pounds from 2025 to 2030, and the authorized ROI from 2025 to 2030 will be increased from 3.54% from 2020 to 2024 to 3.72%. Although the expectation of the Fed's interest rate cut has gradually cooled down this year, it still reminds investors of the significant widening of the relative yield gap. Due to the rise in CKI's stock price, the stock is expected to have a dividend yield of 5.75% this year, which is better than the approximately 4%-4.5% dividend yield of Hong Kong's natural gas utility industry sector.
The report stated that Ofwat initially drafted that NW can raise prices to 460 pounds before 2029-2030, and 415 pounds before 2024-2025. It will receive a subsidy of 5.7 billion pounds from 2025 to 2030, and the authorized ROI from 2025 to 2030 will be increased from 3.54% from 2020 to 2024 to 3.72%. Although the expectation of the Fed's interest rate cut has gradually cooled down this year, it still reminds investors of the significant widening of the relative yield gap. Due to the rise in CKI's stock price, the stock is expected to have a dividend yield of 5.75% this year, which is better than the approximately 4%-4.5% dividend yield of Hong Kong's natural gas utility industry sector.