Sri Lanka is having four main rain seasons.
We had a good north east monsoon season towards end of last year and in January this year, a very productive first inter monsoon season and now we are into a good southwest monsoon season. So we are experiencing three consecutive rainy seasons after several years. This will definitely benefit hydro power generation in next two quarters as well.
I have analyzed the sector on three aspects, Price Earnings ratio, Price to Book Value and Dividend yield. In all three indicators, Hemas Power is trading at 50% discount to the sector.
- · HPWR is continuously in expansion mood. Will increase local power generating capacity by taking the control of PAP or managing PAP as largest shareholder. Numbers of projects are in the pre-development stage in locally and East African countries.
- · In falling interest rate scenario, a dividend yield of 7%+ would be very attractive. In the past company maintained the dividend policy intact with new project developments and acquisitions.
- · Share is trading almost 50% discount to the sector, based on forward PE, PBV ratios and Dividend yield wise.
- · HPWR is a very good defensive share in volatile market conditions.
Link to previous topic - Valuation Guide to Power Sector
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