00659 Overview

Positive Share Price Movement: HSBC Global Research attributes the recent rise in CTF SERVICES' share price to stable earnings growth, an attractive dividend yield of approximately 7%, and reduced concerns regarding its parent company.

Future Liquidity and Demand: The company is expected to experience significant liquidity improvements in the second half of 2025, which may lead to its re-inclusion in Stock Connect by March 2026, potentially increasing demand from southbound investors.

Target Price Adjustment: HSBC has raised its target price for CTF SERVICES from $9.6 to $10.1 while maintaining a "Buy" rating on the stock.

Short Selling Data: As of January 22, 2026, CTF SERVICES has reported short selling of $1.57 million with a ratio of 8.231%.

Investment in Robotics: SHOUCHENG has invested over RMB2 billion in the robotics sector, completing more than 40 transactions with around 20 companies, averaging two follow-up investments per company.

Upcoming IPOs: The group anticipates that approximately four of its invested companies, including Unitree Robotics, will launch initial public offerings (IPOs) this year.

Catalysts for Hong Kong Conglomerates: 2026 is expected to be a significant year for Hong Kong conglomerates like CTF SERVICES, Jardines, and FIRST PACIFIC, with multiple catalysts anticipated according to CLSA's research.

Dividend Expectations: Investors can expect to be compensated through dividends, with a projected 3% year-over-year increase in sector dividends for 2026, supported by a 5% growth in recurring earnings and a weak USD.

Top Stock Picks: CLSA's top stock picks include CTF SERVICES and CKH HOLDINGS, both rated as Outperform with target prices of $8.8 and $61, respectively.

Additional Recommendations: CLSA also favors FIRST PACIFIC and SWIRE PACIFIC A, rating them as Outperform with target prices of $8.2 and $74.

CTF Capital's Share Transfer: CTF Capital, owned by Henry Cheng's family, transferred approximately 53.93% of CHOW TAI FOOK shares to Beyond Luck Limited, a subsidiary of Chow Tai Fook Enterprises, through a non-cash transaction.

Ownership Structure Post-Transaction: Following the transfer, Chow Tai Fook Enterprises will hold about 35% of CHOW TAI FOOK through Beyond Luck, which is primarily owned by Chow Tai Fook Enterprises and CTF Capital.

Strategic Goals: The Cheng family aims to enhance the capital structure of their businesses and unlock value through this equity restructuring, positioning Chow Tai Fook Enterprises as the parent company of CHOW TAI FOOK, CTF SERVICES, and NEW WORLD DEV.

Market Context: The article notes short selling activity and market ratios related to CHOW TAI FOOK and its associated companies, indicating ongoing investor interest and market dynamics.

Dividend Stability: CTF SERVICES (00659.HK) shows a low risk of dividend cuts according to a new free cash flow analysis framework, with a positive outlook for potential dividend increases.

Investment Outlook: CLSA maintains its investment thesis for CTF SERVICES, anticipating a significant chance for the company to re-enter the Shanghai-/Shenzhen-Hong Kong Stock Connect by 2026, which could enhance its valuation.

Earnings Forecast Adjustment: CLSA has slightly adjusted its earnings forecasts and reduced its target price for CTF SERVICES from $9.6 to $8.8, while keeping the rating at Outperform.

Projected Dividend Yield: The projected dividend yield for CTF SERVICES is estimated at 7.5%, reflecting a favorable outlook for investors.

Forecast for Hong Kong Conglomerates: CLSA predicts a 5% growth in recurring profits for Hong Kong conglomerates in 2026, with dividends expected to increase by 3% year-over-year.

Market Conditions: The weak USD is anticipated to support conglomerates, which are currently trading at a 32% discount to their net asset value per share, with a projected dividend yield of 4.6%.

Top Stock Picks: CLSA's top stock picks include CKH HOLDINGS and CTF SERVICES, with target prices raised to $61 and $9.6, respectively, both rated as Outperform.

Additional Recommendations: FIRST PACIFIC and SWIRE PACIFIC A are also favored, with target prices set at $8.2 and $74, respectively, and all recommended stocks are considered to offer attractive risk-reward profiles.