Goldman Sachs has issued a research report maintaining its "Neutral" relative rating on CKI HOLDINGS (01038). Incorporating the latest business trends and the realized gain from the sale of the UK rail business, the investment bank has adjusted its profit forecasts for CKI for 2026 and 2027, raising the 2026 estimate by 14% while lowering the 2027 forecast by 2%. Consequently, the 12-month net asset value-based price target has been slightly reduced from HK$69.6 to HK$69.

CKI HOLDINGS reported an attributable profit of HK$8.3 billion for 2025. Excluding one-off items, such as foreign exchange gains and fair value changes on investments, core profit increased by 6% year-on-year to HK$8.5 billion, meeting expectations. This growth was primarily driven by stronger contributions from Europe, where profit grew 58% to HK$1.0 billion, and from New Zealand, where profit rose 8% to HK$200 million.

Regarding the recently announced proposal to sell UKPN to Engie for a total consideration of £10.5 billion, CKI stated the transaction would allow the group to realize its investment, recognizing an accounting gain of HK$14.5 billion and receiving cash proceeds of HK$45 billion. Management indicated that, assuming the deployment of proceeds into yield-enhancing instruments returning 4% to 4.5%, group earnings may not necessarily decline in the second half of 2026. Post-transaction, on a pro forma basis, CKI is estimated to hold a net cash position exceeding HK$30 billion.

CKI's share price has risen 13% year-to-date, potentially benefiting from favorable currency movements and market expectations of an earnings recovery following regulatory resets. The stock's valuation appears reasonable, with a 2026 forward P/E of 15x and a dividend yield of 4.1%. Potential upside for the share price may stem from CKI's ability to execute sizable and value-accretive acquisitions.