[ET Net News Agency, 19 March 2021] Citi Research lifted its target price for CK Asset
(CKA) (01113) to HK$51 from HK$34.5 and upgraded its rating to "neutral" from "sell".
CKA announced the acquisition of interests in four utility companies from Li Ka Shing
Foundation (LKSF) for HK$17bn, which will be satisfied by issuing 333.3mn new shares at
HK$51/share to LKSF. To eliminate dilution, CKA will make a share buyback proposal to all
qualifying shareholders at HK$51/share.
The research house is generally positive on CKA's commitment to its DPS level, but Citi
also expects that shareholders may be tempted to take profits if the share price is
materially higher than HK$51 offer price.
With abundant cash on hand as well as available banking facilities, CKA is able to
pursue more investment opportunities globally and perform share repurchase, Citi said. It
lifted its earnings estimates for 2021/22 by 8%/5% due to a change in property sales and
booking schedule, together with additional contributions (HK$900mn+) from the potential
acquisition. (KL)