Daiwa Downgrades CK Infrastructure (01038) to "Outperform" Citing Priced-in Positives Despite Stable Fundamentals

Daiwa has released a research report stating that, considering positive factors such as regulatory resets and the sale of its UK rail business are already reflected in the share price of CK Hutchison (00001), it believes the company's fundamentals remain unchanged but further upside is limited. Additionally, with the dividend yield now close to that of its peers, the firm has downgraded its rating from "Buy" to "Outperform," while raising the target price from HK$63.5 to HK$66.3. Last week, CK Hutchison was ruled by the Supreme Court of Panama to have an unconstitutional port concession contract, leading to a decline in the share prices of both CK Hutchison and CK Infrastructure Holdings (01038). The report suggests the ruling likely stems from strategic asset tensions between China and the US, which could disrupt CK Hutchison's planned sale of its global port business to BlackRock. Regarding CK Infrastructure, the report views the event as creating sentiment pressure, as it highlights political scrutiny risks, but notes it does not directly impact CK Infrastructure's profit foundation, as the company's business is primarily focused on regulated utilities in the UK and Australia.