Conglomerate CK Hutchison Holdings is expected to continue focusing on acquisitions, spinoffs, and cost-containment to raise its profit. We think efforts to improve customer retention at its drugstore chain Watsons and the tweaks in its telecom activities will help drive profit.
Currency headwinds should diminish, and a recovery in the euro, pound, and Australian dollar will help lift CKH’s cash flow and earnings in Hong Kong dollar terms.
Bears
Limited acquisition opportunities mean CKH will see slowing earnings growth. Even if it has cash to spend, there may not be suitable purchases to strengthen its core business.
CK Hutchison Holdings is a Hong Kong-headquartered conglomerate with key businesses in ports, retail, infrastructure, and telecommunications. The company was created in 2015 to house the merged assets of Cheung Kong Holdings and Hutchison Whampoa as the group sought to flatten out and simplify its original holding structure. CKH contains most of the businesses previously housed in Hutchison Whampoa, minus the property assets, which were spun off into their own listing, CK Asset Holdings. Telecommunications and infrastructure activities now make up the largest share of EBITDA, at around 51%. The planned sale of most of the ports business is currently being scrutinized by the government.