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On Thursday, HSBC analysts downgraded Beijing Enterprises Holdings (392:HK) from Buy to Hold. The decision follows an assessment of the company’s current market position and future prospects. The firm also adjusted the stock’s price target to HK$33.90 from a previous target of HK$31.60.
The analysts noted that Beijing Enterprises Holdings, a state-owned enterprise, has benefited from the current market environment, which favors equity opportunities with quality returns. The company operates a diversified portfolio of utilities across China, with revenue less exposed to exports and industrial demand compared to its peers. This positioning provides better visibility for dividend distribution.
Despite a 24% year-to-date increase in the company’s share price, HSBC believes that Beijing Enterprises Holdings is fairly valued. The firm’s forward yield stands at 5.1%, which compares to a peer range of 4.7% to 6.9%. The analysts stated that the continued discounts in price-to-earnings and price-to-book multiples are justified for a quasi-conglomerate owned by the Beijing municipal government.
HSBC cited several challenges that could impact the company’s earnings resilience for the rest of 2025. These include fewer water projects under construction, lower electricity prices in Germany, and potential delays in fundamental improvements in gas operations.
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