Hong Kong and China Gas' high P/E ratio is alarming as its forecast growth is below the market average. This could put shareholders' investments at risk and potential investors may pay an excessive premium.

The market overestimated the stock, as the EPS reduction is less than the annual share price drop. The company's performance has been worse than the broader market, with shareholders losing 18%, even with dividends. This concludes a poor run for the company, with shareholders facing an 8% annual loss over five years.

The company's trends of capital reinvestment without increasing returns may not inspire investor confidence, particularly given its declining stock price. This suggests that it may not be the best choice for those looking for a multi-bagger stock opportunity.

The market shows caution for the Hong Kong and China Gas Company, seen in share price and EPS decline. Losses, though less severe than the 8% annual loss experienced over last 5 years, imply need for sustained metric improvement to entice investors back.

SUMMARY
With the end of Fed rate hikes in sight, we believe this is a good time to revisit HK utilities that offer >5% yields on average. They also offer unique exposure to investors that seek names with geographically diversified earnings (Figure 1). What’s more, these companies have become more active in rationalizing their capital allocations to de-gear their balance sheets and improve shareholder returns, which are ...