CK Hutchison Earnings: Ports and Telcos Strong; Fair Value to HKD 61 from HKD 60

We increase our fair value estimate for CK Hutchison Holdings to HKD 61 per share from HKD 60 after CKH’s interim 2024 result, where revenue rose 3.9% and earnings per share declined by 9.2% year over year. CKH’s profit before tax increased by 0.6%, so the earnings per share decline was all related to CKH paying unusually low tax in the first half of 2023. Even if we assume operating earnings grow only slowly, which our forecasts do, the stock looks extremely inexpensive, trading on a 2024 price/earnings ratio of only about 6.5 times with a 6.2% dividend yield. Ports and telecoms were the main positives in the 2024 interim result, with retail and infrastructure less impressive. We retain our no-moat rating on the stock due to our view that only its ports business, which represents around 25% of its value, has a moat.