(27-03-2020, 11:23 AM)jaco Wrote: [ -> ] (11-08-2019, 03:12 PM)jaco Wrote: [ -> ]CK Hutchison is a well-run conglomerate that holds subsidiaries with moats around their business. I will keep it on my watch list and might buy the share when it's so obviously cheap in terms of dividend yield, PEG, EV/EBITDA, etc that you don't need a precise SOTP calculation for a confident decision.
The recent market turmoil did not leave CK Hutchison unaffected and I decided to buy tuesday at 49.50 HKD per share. As stated earlier, I will not pretend that I am able to value this complicated conglomerate in all details, but as Ben Graham said: “You don’t have to know a man’s exact weight to know that he’s fat.”
The stock is quoted with a P/E around 5. This seems ridiculously low to me. Note that the E here, is not inflated by any non-recurring income. CK Hutchison had a presentation of it's FY 2019 results last week and those results were overall pretty similar to 2018.
All subsidiaries performed decent in 2019, except for Energy. This concerns the Canadian oil company Husky, which is a disaster. However, Husky is only a few percent of the overall conglomerate in any way you want to measure.
CKH's borrowings are high, but the maturities are staggered over the next 10 years. Interest and repayments seem well covered by the free cash flows. With assets such as toll roads, harbours, waste processors, water and electricity suppliers any default seems unlikely. These are also the type of assets that I expect to weather the current crisis, even if it takes longer as we expected.
I bought CK Hutchison as a cornerstone for my portfolio with the intention to hold it for the long term.
Some more background from external source:
https://valueinvestasia.com/here-is-what...dings-ltd/
haha i was also thinking along these lines a week ago, i.e " . As stated earlier, I will not pretend that I am able to value this complicated conglomerate in all details"
But it does look cheap statistically
But eventually i decide that if i were to choose between CKH or BRK, i would go for berkshire
[quote pid='157090' dateline='1585280586']
But eventually i decide that if i were to choose between CKH or BRK, i would go for berkshire
[/quote]
You don't have to chose. BRK is also on my watchlist, but it's not as obviously cheap as CKH at this point.
There was a lot of attention for the Jardine Group last week, but in the meantime HK's other big conglomerate CK Hutchison also reported its results for 2020:
https://www.ckh.com.hk/en/ir/announcements.php Obviously, the results were bad due to the lockdowns, but no real surprises for those who have been following the company.
Husky Energy has been taken over by Cenovus Energy in exchange for shares in the latter. CK considers this an investment and energy is not listed as a core business on the website any longer.
A good analysis of CK Hutchison was posted on Seeking Alpha:
https://seekingalpha.com/article/4415500...er-you-buy
This article attempts to calculate a valuation too. I agree with its conclusion:
CKH is an undervalued conglomerate that has significant upside with a low downside.
Note: sibling-company CK Asset Holdings reported some assets reshuffling with the Li Ka Shing Foundation which seem material. I am not a shareholder in CK Asset.
The aastocks website shows the NAV for CKH has been rising over the last 5 years from $102 to $128.
But the dividend payments for 3 yrs out of 5 years have been rising but during last 2 years been in declining trend from $2.68 - $2.85 - $3.17- $3.17- $2.31.
Share price is around $61 ( 25 Mar 2021) and UBS sees the target price at $76.
CKH's dividend policy is X% of their earnings. Their 2020 earnings are affected by Covid 19 (Watson) and they took an large impairment loss on Husky Energy. Due to the lower earnings in 2020, their dividend in 2020 was also lower.
Their 2021 earnings should be better than 2020, as the 2020 impairment loss on Husky will not be there and Watson's earnings will not be as badly hit as in 2020.
If CKH can get back to 2019's earnings (eps of 10) and with current price of $61, the PER will be 6.1.
The USD22.8 bil Panama deal
A group backed by investment firm BlackRock has agreed to buy a majority stake in the Hong Kong subsidiary that runs ports along either side of the Panama Canal, giving the US firm control over key docks. The deal, valued at USD22.8 bil (RM100.99 bil), was made between the investor group and Hong Kong-based CK Hutchison.
This might be where Trump met his match in
the art of the deal, though. Hong Kong billionaire Li Ka-shing, who leads CK Hutchison, was already aware of the pressure from the US over two ports in particular, and decided to sell the bulk of the shares in the subsidiary to the BlackRock group, exiting a geopolitically sensitive area with
a boatload of cash – USD19 bil, to be specific, with the rest of the USD22.8 bil used to pay off some shareholder loans.
Still, Trump is celebrating, calling the deal the start of his administration reclaiming the Panama Canal. Of course, Panamanian President Mulino has called Trump a liar for saying that, asserting that the Panama Canal is not in the process of being reclaimed, as it is Panamanian and will continue to be so. ... @thecoffeebreak
BlackRock to buy Hong Kong firm’s Panama Canal port stake amid Trump pressure
yes 3 years from now we will probably see the sale was +/- 6 months to peak
Agree it gives face to all the parties involved and good deal for CK
If I didn't understand wrongly it is for the entire port business that was under old Hutchison including Panama stake... totally out of ports that's a strong call
(Yesterday, 11:57 AM)specuvestor Wrote: [ -> ]yes 3 years from now we will probably see the sale was +/- 6 months to peak Agree it gives face to all the parties involved and good deal for CK
If I didn't understand wrongly it is for the entire port business that was under old Hutchison including Panama stake... totally out of ports that's a strong call
From Nikkei:
The Li Ka-shing family company agreed to unload the Panama ports and dozens of other
facilities around the world to a consortium of investors led by the world's biggest asset
manager, BlackRock, the company said in a filing late Tuesday.
The ports that the group
operates in China and Hong Kong are not affected by the arrangement.
From Caixin Global:
Panama ports: Hong Kong-based CK Hutchison Holdings Ltd. is selling a controlling position in its Panama port business, following pressure on the local government from U.S. President Donald Trump. A consortium led by BlackRock Inc. is buying the stake in Panama Ports Co., which runs two ports near the Panama Canal
and more than 40 other ports globally, for around $19 billion. The deal shows the weight that Trump’s words carry: Panamanian authorities audited the company after he threatened to take back the waterway, citing China’s influence on the key U.S. trade route. The canal, which connects the Pacific and Atlantic oceans, was built and controlled by the U.S. until it was gradually handed over from 1977 — which Trump called a “foolish gift that should have never been made.”
--
The clarity of the trade war should already make the buyer not as enthusiastic as he would be. But then again, maybe the buyer is underestimating its effects (the double whammy of reduced trade due to tariffs and onshoring becomes a permanent feature)?
BlackRock is an asset mgr and make recurring fees from managing money, not operating or owning the assets. So the other side of Superman's trade would really be all the institutional folks (pension/insurance/endowment funds etc).
I think
The ports that the group operates in China and Hong Kong are not affected by the arrangement. is the Hutch Port Trust listed in SGX
On a similar note HK ports started to lose its allure to Pearl River Delta just after the Hutch Port Trust listed in 2011, from being PSA competitor
https://www.timeout.com/hong-kong/blog/h...era-062316
(Yesterday, 02:05 PM)edragon Wrote: [ -> ] (Yesterday, 11:57 AM)specuvestor Wrote: [ -> ]yes 3 years from now we will probably see the sale was +/- 6 months to peak Agree it gives face to all the parties involved and good deal for CK
If I didn't understand wrongly it is for the entire port business that was under old Hutchison including Panama stake... totally out of ports that's a strong call
From Nikkei:
The Li Ka-shing family company agreed to unload the Panama ports and dozens of other
facilities around the world to a consortium of investors led by the world's biggest asset
manager, BlackRock, the company said in a filing late Tuesday. The ports that the group
operates in China and Hong Kong are not affected by the arrangement.
From Caixin Global:
Panama ports: Hong Kong-based CK Hutchison Holdings Ltd. is selling a controlling position in its Panama port business, following pressure on the local government from U.S. President Donald Trump. A consortium led by BlackRock Inc. is buying the stake in Panama Ports Co., which runs two ports near the Panama Canal and more than 40 other ports globally, for around $19 billion. The deal shows the weight that Trump’s words carry: Panamanian authorities audited the company after he threatened to take back the waterway, citing China’s influence on the key U.S. trade route. The canal, which connects the Pacific and Atlantic oceans, was built and controlled by the U.S. until it was gradually handed over from 1977 — which Trump called a “foolish gift that should have never been made.”
--