The Physical Layer

AI and energy infrastructure, explained plainly.

The Physical Layer

Research · Initiation · 2 November 2026

CLP Holdings HKEX: 0002

Hong Kong's grid is building for its data centres. CLP is paid on the substations, not the kilowatt-hours, and the price already pays for the plan.

The call No call
Price at publication
HK$77.75close, 2 November 2026
Target
Noneno position at this price
Conviction
Medium

What would prove the thesis wrongThe shares close above HK$90 or below HK$62 in October 2027, or Hong Kong energy and related operating earnings for 2026 come in below HK$9.8 billion, which would mean the regulated engine is growing more slowly than its asset base.

What would turn this into a callA price below about HK$68.80, where my base value would sit 15 per cent above it, or Government approval of additions to the Development Plan worth about HK$22 billion of regulated assets by 2028, the amount my sensitivity says a long needs at today's multiple.

Read the full notePDF, 5 pages: thesis, valuation, scenarios, risks and sources Open the modelExcel, live formulas: change an assumption and the target moves

The call in brief

  1. CLP Holdings earns 82 per cent of its segment profit in Hong Kong, where CLP Power must meet all demand and is paid a permitted return of 8 per cent a year on its average net fixed assets, about HK$145 billion in 2025.
  2. The claim holds on CLP's filings. CLP had finished eight data centre substations in its 2024 to 2028 plan by June 2026, against three in the previous plan, and targets Sandy Ridge operating from mid-2027.
  3. Data centres reach the shares only through the assets they add, not the power they use. On my arithmetic each extra HK$1 billion of regulated assets adds about HK$0.026 a share a year, and a long would need about HK$22 billion more by 2028, 42 per cent of the whole HK$52.9 billion plan.
  4. At HK$77.75 the shares trade at 16.7 times my 2027 estimate and yield 4.1 per cent. A sum of the parts on my 2028 estimates gives about HK$79.10, 2 per cent above the price.
  5. My call: no call, with medium conviction. I would revisit below about HK$68.80, or if the Government approves about HK$22 billion of extra regulated assets by 2028.