Key Takeaways
Morgan Stanley boosted its price target on CK Hutchison Holdings Ltd. by nearly 28% to HKD 78, citing the company's asset monetization strategy after it sold a major UK telecom stake for £4.3 billion.
The bank, which maintained its "Overweight" rating, noted in its report that CK Hutchison's unlisted assets in ports, telecommunications, and retail are currently assigned zero value by the market, making any disposal accretive to the share price.
The upgrade follows CK Hutchison's agreement to sell its 49% interest in the VodafoneThree joint venture. Morgan Stanley's new target corresponds to approximately 10.3 times the company's 2026 forecast price-to-earnings ratio. The sale itself was valued at 7.7 times the joint venture's 2026 estimated EV/EBITDA.
The deal will cut CK Hutchison's net debt by about 40% to HKD 68 billion, strengthening its balance sheet for potential share buybacks or special dividends. The bank narrowed its net asset value discount on the company from 40% to 30% following the move.
The successful asset sale reinforces the effectiveness of CK Hutchison's recycling strategy, which could lead to a sustained re-rating as the holding company discount narrows. Morgan Stanley said it expects more similar disposal transactions in the future.
The transaction provides CK Hutchison with substantial cash to fund business expansion, infrastructure upgrades, or other potential acquisitions. Investors will now watch for the deal's completion, expected in the second half of 2026, and any announcements on capital returns.
This article is for informational purposes only and does not constitute investment advice.
