01038 Overview

UBS Research Report: UBS believes that the sale of CKI HOLDINGS' entire stake in UK Power Networks is a positive move, with the sale price exceeding their forecast by about 5%.

Valuation Insights: The sale translates to a valuation of approximately $3.7 per share for CKI HOLDINGS and $3.5 per share for POWER ASSETS based on a discounted cash flow framework.

Dividend Expectations: UBS suggests that CKI HOLDINGS is unlikely to distribute a special dividend soon, as the company is more focused on redeploying cash for potential acquisitions.

Stock Rating: UBS maintains a "Buy" rating for CKI HOLDINGS, setting a target price of $73.

Sale of UK Power Networks: CKH Holdings, CKI Holdings, and Power Assets will sell their 40% stakes in UK Power Networks to Engie for GBP10.5 billion, as reported by UBS.

Impact on Valuation: The sale is expected to increase CKI Holdings' valuation per share by $3.7, which translates to a 1.4% impact on CKH Holdings' share price.

Investment Strategy: UBS noted that the group is not considering a special dividend but prefers reallocating funds for potential new acquisitions.

Broker Rating: UBS maintains a Buy rating for CKH Holdings with a target price set at $67.

Transaction Overview: CKI Holdings, Power Assets, and CK Asset sold their entire stake in UK Power Networks to Engie for over HKD110 billion, with an enterprise value of HKD176.8 billion.

Impact on Power Assets: UBS estimates Power Assets' share of the transaction value at approximately HKD44.3 billion, predicting a gain of about HKD10.7 billion, and maintains a Buy rating with a target price of HKD70.

Dividend Expectations: UBS suggests that a special dividend from Power Assets is unlikely in the short term, as the company may prefer to redeploy cash for new acquisitions.

Market Performance: The short selling ratios for CKI Holdings, Power Assets, and CK Asset are noted, with CK Asset showing a positive performance increase of 3.371%.

CKI Holdings Transaction: CKI Holdings announced the sale of its entire stake in UK Power Networks to Engie for approximately GBP10.55 billion, which is seen as a highly favorable deal compared to a previous failed transaction in 2022.

Financial Impact: The deal is expected to generate HKD44 billion in proceeds for CKI, shifting its financial position from a projected net debt of HKD11 billion in 2025 to a net cash position of around HKD41 billion by 2026.

Dividend Policies: Despite the improved cash position, Daiwa does not anticipate significant changes to the dividend policies of CKI and Power Assets Holdings, as the operating cash flow is expected to remain stable.

Market Rating: Daiwa rated CKI as "Outperform," highlighting the transaction as a strategic move to secure long-term returns at a reasonable multiple.

CKI Holdings and Related Companies: CKI Holdings, Power Assets, and CK Asset have reported short selling figures and stock price changes, with CK Asset showing a positive increase of 2.164%.

Sale of UK Power Networks: The companies announced the sale of their entire stake in UK Power Networks to Engie for approximately GBP10.548 billion, which could result in significant profits for CK Asset.

Financial Projections: Morgan Stanley estimates CK Asset will gain a profit of $8.4 billion from the sale, with a projected net income of $22.2 billion, potentially leading to a net cash position.

Stock Ratings and Forecasts: Morgan Stanley maintains a target price of $47 for CK Asset, with an expected FY2025 underlying profit of $13.2 billion, and a forecasted dividend payout ratio of 47%.

Hong Kong Stock Market Performance: The Hong Kong stock market opened higher but closed lower, with the HSI down 384 points (1.4%) at 26,381, and total market turnover at HKD259.277 billion.

CKI Holdings' Stock Surge: A consortium led by CKI Holdings sold UKPN, resulting in a 4.5% increase in its stock price, while CKH Holdings and Power Assets also saw significant gains.

Tech Sector Declines: Alibaba's stock fell 3.6% after a report predicted weak quarterly profits, while other tech stocks like Tencent and Meituan also experienced declines.

Pharmaceuticals and Consumer Stocks Drop: Various pharmaceutical and consumer stocks saw significant losses, with declines ranging from 3.3% to 9.2% across multiple companies.