CKI Holdings (01038) Surges Over 4% on Robust Free Cash Flow Prospects for Better Shareholder Returns

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CKI Holdings (01038) rose more than 4% in Hong Kong trading, reaching HK$55 with a turnover of HK$240 million. HSBC highlighted the resilience of Hong Kong's utilities sector against market volatility, naming CKI as its top pick due to its strong free cash flow, which is expected to enhance shareholder returns. The bank also anticipates stronger M&A value-add potential by 2026.

Morningstar raised its fair value estimate for CKI by 3% to HK$65, citing slightly improved earnings expectations. The stock remains undervalued, trading at a forward P/E of 15x and offering a dividend yield of 4.8%, with stable medium-term prospects. Morningstar projects a 6.3% CAGR in EPS over the next five years, driven by higher regulated returns reflecting increased capital costs since the last review.

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