[ET Net News Agency, 22 April 2020] Morgan Stanley lowered its target price for CK
Infrastructure Holdings (CKI)(01038) to HK$50 from HK$54 and maintained its "equal-weight"
rating.
The research house said the price target cut reflects estimated earnings decline due
mainly to FX depreciation as well as the negative impact on allowed return amid upcoming
regulatory resets.
Morgan said CKI's operating cash flow has been more volatile than peers, mainly due to
its investment holding structure and its cashflow being heavily reliant on dividends from
associates/joint ventures.
Morgan added that, excluding the Power Assets Holdings (PAH)(00006) special dividend,
CKI OCF (operating cash flow) was stable at HK$7-8bn in the past 4 years. There is little
capex given its investment holding structure, thus the HK$7-8bn OCF is sufficient to fund
the dividend of HK$6bn. It noted CKI's cash balance of HK$12bn by the end of 2019 could be
used to support its dividend. (KL)