New Value Analysis of CK Hutchison Holdings Ltd (Hong Kong:1)

Published by Studio 61 Wealth Management at 26th May 2016

New Value Analysis of CK Hutchison Holdings Ltd (Hong Kong:1)

A new value analysis of CK Hutchison Holdings Ltd (Hong Kong:1), a company listed in Hong Kong has been added to our research pages here. CKHH is a major conglomerate with interests in retail, ports, property, energy and telecoms.

During 2015 CK Hutchison Holdings Ltd was created as a result of several transactions that reorganised Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited. The transactions merged certain assets and businesses into CKHH and simultaneously reallocated them between the CK Hutchison Holdings Ltd and Cheung Kong Property Holdings Limited on 3 June 2015.

As the reorganisation took place in the middle of a financial year there is not yet a full year of results for the new entity. Therefore, the valuation of the common stock is more difficult.

The reorganisation also means that there is no direct comparison with previous years.

It remains possible to make a value based analysis for the common stock. CKHH provides two sets of results in the 2015 Annual Report. CKHH gives the actual results as reported earnings and also gives pro forma results. Pro forma results are an estimate based on the assumption that all the businesses that were part of CKHH at the end of the year were part of CKHH throughout the whole year.

The most significant impact is on the earnings exhibit. The earnings exhibit can be analysed as reported earnings and pro forma earnings. The results of the analysis of the two earnings numbers provide a reasonable degree of comfort to a value investor at the current price.

UK based investors might be particularly interested in CKHH as 21% of the pro forma earnings come from the UK.

To find out exactly why CKHH can be considered as an investment by a value investor, click here to download the new analysis.