CLSA has released a research report stating that Hong Kong-listed conglomerates continue to be viewed by equity investors as high-quality dividend safe havens, possessing resilient asset portfolios and rising dividends; the firm maintains its earnings forecasts, ratings, and target prices unchanged, with the sector currently trading at a 37% discount to net asset value (compared to a long-term average of 30%), and CK Hutchison (00001) and CTF Services (00659) remaining its top picks.
The firm notes that investor interest remains concentrated on family-owned enterprises, with attention focused on the next round of catalysts and their timelines. Investors generally agree that Hong Kong-listed conglomerates are good dividend safe havens and are not heavily held by investors; amid elevated uncertainty, investors favor the resilient asset portfolios across the conglomerates covered by the firm. Based on the firm's currently published forecasts, the aggregate recurring profit and cash dividends for Hong Kong-listed conglomerates in 2026 are expected to grow 6% and 9% year-on-year respectively, to US$8 billion and US$4.2 billion, with CK Hutchison and Swire Pacific A (00019) as the two major drivers.
The firm states that the conglomerates most discussed with investors are CK Hutchison, Jardine Matheson, and First Pacific (00142). Under high oil prices, Cenovus Energy will support CK Hutchison's earnings growth, while property and non-property businesses underpin Swire Pacific's forecast recurring profit growth for 2026 and 2027; regarding Jardine Matheson and First Pacific, although investors are not enthusiastic about Indonesia, they agree that both possess quality assets and attractive equity valuations.
On CK Hutchison, there is little opposition from investors to the firm's thesis, but concerns remain about the timelines of multiple potential transactions including the ports sale (first announced in March 2025); in the absence of catalysts, the firm prefers stocks with steadily rising dividends. For MTR Corporation (00066), the firm continues to see risks of dividend cuts or equity financing due to elevated future capital expenditure (HK$84.8 billion guidance for 2026 to 2028).
Regarding ratings, apart from MTR Corporation (00066) which is rated "Hold," all others carry positive ratings. CK Hutchison is rated "High Conviction Outperform" with a target price of HK$110; CTF Services is rated "Outperform" with a target price of HK$11.5, offering a sustainable dividend yield of 7.6% per annum at the current price; Swire Pacific and First Pacific are each rated "Outperform" with target prices of HK$114 and HK$6.8 respectively; MTR Corporation has a target price of HK$33.