CLSA issued a research report stating that following the release of CTF SERVICES's interim results for the first half of fiscal year 2026, ending December last year, the firm has raised its recurring profit forecast by 2% to 3%, based on higher profit projections for toll roads and the company's life insurance business. Dividend per share growth continues to be well-supported by its strong free cash flow. The report noted that, with an estimated dividend yield of 6.8% for fiscal year 2027 and the stock's inclusion in the Southbound Stock Connect on March 9, CTF SERVICES remains well-positioned for a potential revaluation. CLSA narrowed the target discount to 10%, leading to an increase in the target price from HK$8.8 to HK$11.5. This target price implies a dividend yield of 5.2%. The "Outperform" rating is maintained.
CLSA slightly raised its recurring profit forecast for CTF SERVICES by 2% to 3%, due to increased profit expectations for equity-accounted toll roads and higher revenue projections for the life insurance segment. These positive factors were partially offset by a reduction in the profit margin forecast for the construction business and lower occupancy rate expectations for the ATL logistics center. Beyond recurring profit, the report also factored in a HK$105 million impairment expense recognized for certain roads in the first half of fiscal 2026, resulting in a net downward revision of 3% to the nominal profit forecast for fiscal 2026.
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