Lyon: Maintains CTF SERVICES (00659) "Outperform" rating with a target price of 8.2 Hong Kong dollars.

Lyon has issued a research report stating that CTF SERVICES (00659) maintains a "outperform" rating, with a target price of 8.2 Hong Kong dollars, believing that CTF SERVICES' stock price is trading at a 42% discount to its net assets. Lyon pointed out that CTF SERVICES has reported good mid-term performance, with the company's recurring profit increasing by 11% year-on-year, benefiting from the Asia Container Logistics Center and CHOW TAI FOOK Life Operations. The company also announced a special dividend of 0.3 Hong Kong dollars per share, which was seen as a positive surprise. Lyon still sees room for dividend growth, with the company able to pay an additional special dividend of 0.4 Hong Kong dollars per share under the assumption that its equity to net debt ratio rises from 39% to 45%. The report stated that the company's target net debt to equity ratio is 40% to 45%, compared to 39% in December last year. It is estimated that with leverage, the company could still potentially pay an additional special dividend of 0.4 Hong Kong dollars per share, equivalent to a 5.2% extra dividend. Lyon estimated that after deducting CHOW TAI FOOK's life business, the company's recurring free cash flow from 2025 to 2027 would be 8.1 billion Hong Kong dollars, which is enough to support its progressive dividend policy, with a total dividend payment estimated at 8 billion Hong Kong dollars.