CKI Earnings: Mixed Performance but Management Upbeat on Acquisition Outlook

No-moat CKI's 2023 results were mixed. While net profit of HKD 8.0 billion was in line with our estimate, it was helped by an HKD 572 million currency gain, and without this, core profit was 6.8% below our expectation. On the positive front, it appears its two more significant asset groups—the UK and Australian power and gas utilities—are performing well. Associate Power Assets' contributions were also in line. However, we make some tweaks to our earnings assumptions, leading to a 6.2% reduction in our 2024 profit forecast. This mainly reflects lower margin and revenue projections for its Hong Kong materials, Dutch waste-to-energy, and UK Rails assets. Our fair value estimate is only slightly lowered to HKD 53.30 from HKD 54.00. CKI's dividend per share was as estimated at HKD 2.56, and we continue to expect CKI to grow its dividends by 1.2% annually.