Morgan Stanley: CKH HOLDINGS (00001) target price raised to HK$78, expecting asset sales to drive revaluation.

Morgan Stanley released a research report stating that the sale of a 49% stake in the UK telecommunications business by CKH HOLDINGS (00001) is part of its asset recovery and monetization strategy, which will help drive asset net worth and narrow the discount. The bank maintains a "hold" rating, with a target price raised from 61 Hong Kong dollars to 78 Hong Kong dollars, and expects more similar sales transactions in the future. CKH HOLDINGS merged its telecommunications business with Vodafone in May 2025, and then sold a 49% stake in the joint venture for 4.3 billion pounds (about 450 billion Hong Kong dollars, equivalent to 7.7 times the 2026 forecast EV/EBITDA). The bank stated that CKH HOLDINGS' non-listed assets (ports, telecommunications, and retail) are currently assigned zero value by the market, and any sale action will have a value-added effect on the stock price. After the sale is completed, CKH HOLDINGS' net debt will decrease from 113 billion Hong Kong dollars to 68 billion Hong Kong dollars. The bank uses a category aggregation valuation method, narrowing the asset net worth discount from 40% to 30% (1 standard deviation above the ten-year average), and raising the target price-to-earnings ratio of the retail business from 12 times to 15 times to reflect improvements in the European outlook. The new target price of 78 Hong Kong dollars corresponds to a 2026 forecast P/E ratio of approximately 10.3 times. The bank believes that CKH HOLDINGS' forecast P/E ratio of 11 times in 2026, a price-to-book ratio of 0.43 times, and a free cash flow yield of 8% are attractive valuations, and the strong balance sheet may mean share buybacks or special dividends.