Citigroup: expects CKI Holdings (01038) to make acquisitions or special dividends in the next 12 to 18 months, with a target price raised to 73.5 Hong Kong dollars.

Citibank released a research report stating that CKI HOLDINGS (01038) announced its full-year performance as of the end of December last year, reaffirming its "buy" rating on the stock. The reasons include the low business risk of the group, with most of its income coming from regulated return assets; the huge hidden value of the group's assets shown by the 40% stake sale in UK Power Networks bringing in HK$45 billion or HK$17.9 per share; and the profit growth potential brought by acquisitions. Citibank used the sum of the parts valuation method (SOTP) and factored in the expected sales transactions by the group in the first half of this year, raising its target price for CK Infrastructure Holdings by 18%, from HK$62.5 to HK$73.5. The report also noted that although the group's expected dividend yield of 4.1% in 2026 is not high, there is potential for an increase in dividend yield if there is a large-scale acquisition. If no large-scale acquisitions occur in the next 12 to 18 months, the company may distribute the proceeds from the sale as a special dividend, similar to the approach taken by its affiliate POWER ASSETS (00006) after the spin-off of Hongkong Electric Investments (02638) in 2014.