Brokerage CIMB has lifted its price target on Hong Kong’s Cheung Kong Property Holdings (1113.HK) by 9% after the acquisition of Australian utility DUET.
The acquisition of a 40% stake in Duet, combined with other previous acquisitions like aircraft leasing, could lift recurring income from HKD8.6 billion in 2016 to between HKD10 billion to HKD12 billion for the 2017 to 2019 financial years. CIMB, which has an add rating on the stock, expects dividends to rise in the 2017 to 2019 financial years as recurring income increases.
Cheung Kong Property’s share price has been supported by a buyback. The company has bought HKD5 billion of stock year-to-date, which accounts for around a third of daily trading volume. CIMB expects the share buyback to continue. Here’s why the price target was lifted from HKD60 a share:
We revise up our FY17-19F core profit by 4.5-9.8% after factoring in Duet’s contribution and the share buyback YTD. We raise our TP to HK$66 with a narrower discount to NAV of 40% (45% previously) to reflect the better sentiment in the Central office market. CKP is currently trading at a 48% discount to NAV, which is attractive, in our view.
Barron’s Isabella Zhong earlier this month wrote a bullish story on the stock. For details please read CK Property: 3 Reasons to Buy This Blue Chip Now. The stock is up 24% over the past year.
May 16, 2017 at 02:25PM
from Robert Guy
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