Citi has released a research report maintaining a "Neutral" rating on HKELECTRIC-SS (02638), with a target price of HKD 7. The rating is based on the company's first-half results meeting expectations. The company benefits from a defensive earnings base, underpinned by a fixed 8% return on regulated assets under its Hong Kong electricity business, which is growing at a five-year compound annual growth rate of 2.8%.

The bank noted that while the expected 5% dividend yield for the 2026-2028 period is decent and sustainable, it is not significantly higher than the current 4.7% yield on 10-year US Treasuries. Furthermore, the lack of growth in HKELECTRIC-SS's dividend per share leads Citi to view the stock as a bond-like investment. The report warns that if US dollar interest rates rise, the stock could face downside risk. Among Hong Kong utility stocks, Citi prefers Guangdong Investment (00270), which offers an expected yield of 5.7% for 2026.