US and China trade turmoil, rising political tensions in Hong Kong and erratic Australian regulation have driven down shares of CLP Holdings (CLPHY) below our buy target; now’s the time to pick up shares of this Aggressive Holding, suggests leading utility expert Roger Conrad, editor of Conrad's Utility Investor.

For more than a century, CLP has navigated turbulence in southern Asia with successful negotiations for mutual profit. Last year, management negotiated a new 15-year “Scheme of Control,” winning regulators’ pre-approval of an aggressive utility spending plan, backed by a guaranteed rate of return.

Hong Kong contributes almost 60 percent of CLP earnings. Under the new Scheme of Control, a lower rate of return will likely crimp profit this year. That will reverse, however, as rate base grows rapidly from increased adoption of wind and solar energy, build out of LNG and electric vehicle infrastructure and other grid enhancement.

Management’s 3.2 percent dividend increase earlier this year is thanks to confidence in long-term Hong Kong earnings. But the company is also on track for much faster growth in India and China ex-Hong Kong (15 percent of earnings), as well as Taiwan and Vietnam.

Two thirds of CLP’s China earnings are from nuclear power. That increases next year as a new unit at the 17 percent-owned Yangjiang plant enters service. Wind and solar growth in India, meanwhile, is set to accelerate with CDPQ as the company’s 40 percent equity partner.

At 20 percent of CLP’s overall earnings, Australia will remain a challenge until that country forges a coherent energy policy. But while a writeoff of between HKD6 and HKD7 billion (mid-point USD830 million) of goodwill there will produce a first half loss, it’s also a non-cash charge.

And the continuing earnings impact of the rate change in Victoria state causing it is less than 2 percent of the bottom line, an amount that could be more than offset by investment opportunities in renewable energy and coal.

Bottom line: the current challenges hitting the share price won’t derail CLP’s dividend and balance sheet growth, or impede its long-term growth prospects. Buy the five-letter American Depositary Receipt CLPHY whenever it trades at 11 or less.

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