[ET Net News Agency, 1 June 2020] Goldman Sachs lowered its target price for Cheung
Kong Infrastructure Holdings (CKI)(01038) to HK$52 from HK$59 and maintained its "neutral"
rating.
The research house sees greater risk for CKI in later years, as scheduled regulatory
resets in 2020-23 and FX volatility could reduce available project cashflow. With COVID-19
presenting uncertainty and downside risks to their cash flow, it raises questions about
the sustainability of their dividend.
Goldman said CKI distributed much of the HK$7.1bn or HK$2.8/share cash flow from its
project companies as dividend last year (i.e., HK$6.2bn or HK$2.46/share dividend
declared). If project cash flow falls, the group would likely look to fund part of the
dividend with the HK$12bn cash on hand. On a positive note, given the stable nature of
CKI's cash flow, the risk to cash flow is more limited versus other conglomerates. (KL)