Lyon: Maintaining CTF SERVICES (00659) "outperforming the market" rating, target price lowered to 8.2 Hong Kong dollars.

Lyon released a research report stating that CTF SERVICES (00659) will maintain a "outperform market" rating, estimating a dividend yield of 8.6% for the 2025 fiscal year. Considering that the controlling shareholder has no intention of selling its shares, Lyon believes that issuing convertible bonds is a reasonable solution with minimal dilution. Taking into account the conversion and RMB exchange rate forecast, Lyon believes that this will have a negative impact of about 4% to 7% on the forecasted recurring profit, and accordingly lowers the target price to HK$8.2. The report states that CTF SERVICES announced plans to issue convertible bonds worth 780 million yuan, with an initial conversion price of HK$8.043 per share, a premium of about 5%. The bonds can be converted into a total of 97.87 million new shares, representing approximately 2.369% of the enlarged share capital of the company. Lyon points out that after full conversion of the convertible bonds, the public shareholding of the company will increase to 25.64%, above the minimum public shareholding level of 25% required by listing rules.