Citigroup has released a research report reiterating its "Buy" rating on China Hongqiao (01378), setting a target price of HK$48. The report highlights a recent share purchase by the company's controlling shareholder and expectations of a high dividend yield as key factors supporting a positive outlook.
The report notes that the controlling shareholder of China Hongqiao purchased 21 million company shares on the market on June 8 at an average price of HK$26.4641 per share, involving approximately HK$556 million. This purchase represents about 0.21% of the total issued share capital.
Following this transaction, the controlling shareholder, China Hongqiao Holdings Limited, has increased its total shareholding to approximately 6.1185 billion shares, raising its stake to 62.31%. Citigroup views this move as a strong demonstration of the controlling shareholder's confidence in the company's future prospects.
Citigroup also pointed out that the current share price appears undervalued and suggested there is potential for further share purchases by the major shareholder. The company is required to maintain a public float of 15.04% under relevant exemptions, a condition it currently meets.
Furthermore, the report projects that China Hongqiao could offer a dividend yield as high as 9.1% for the 2026 fiscal year, which is considered highly attractive to investors.
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