Wednesday, August 10, 2011

Guangdong Investments purchased

This morning I made a small additional investment in Guangdong Investments (HK:270) paying HKD4.26 per share. The company is essentially a utility with its largest asset being the water business. The later is interesting in that the long term contract to supply water to Hong Kong is due to be renegotiated later this year. Given the way in which the PRC government has shifted the inflationary burden onto the toll road operators, there is at least some risk that the company may be put under pressure to absorb inflationary pressures itself (rather than set a free market price), but my view is that this is well recognised and already reflected in the price.
Trailing yield is 3.5%

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