CKI Earnings: Lower 2023 Profit Growth but Swing to Currency Tailwind Lifts Outlook

CKI Holdings’ first-half 2023 net profit of HKD 4.24 billion, down 3.9% year on year, is slightly short of our original forecast, leading to a reduction in our full-year 2023 net profit estimate by 6% to HKD 8.28 billion. Our projections for other years are little changed, and our fair value estimate stays at HKD 58. We now see EPS growing 6.9% this year and 11.1% in 2024. We expect a better second-half profit, helped by currency tailwinds and the potential reduction of mark-to-market inflation hedge costs. Interim dividend was raised 1.4%, within expectation. We continue to like CKI, believe the company is well-poised and should see opportunities to make an acquisition over the next 18 months. The shares currently trade at a 44% discount to our fair value estimate, 12 times 2023 price/earnings and 6.4% dividend yield.