CK Hutchinson Holdings Limited


Ticker: CKHUY, Buy below $15.

Why I Would Buy

  1. Cash Flow Generation – A hard to replicate collection of cash-flow generating assets such as ports, utilities, telecom, infrastructure assets, retail stores and more.
  2. Global Diversification – Revenues are generated from a highly diversified geographical base, reducing concentration and currency risks:CKRevenues
  3. Large Insider Holding – Legendary investor Li Ka-Shing and his family owns approximately 60% of the company. Minority shareholders can benefit by aligning themselves with the family’s interests.
  4. Strong Ratings Consensus – According to The Financial Times, of the 15 analysts covering CK Hutchison 7 held “Buy” opinion and 8 had “Outperform” opinion. None had a “Hold” rating or below.
  5. Extremely Cheap – Trades at about 17% discount to book and at about 7.3 times 2015 earnings.

What Could Go Wrong

  1. Large Beta –Ports and infrastructure businesses are strongly correlated with global trade volumes and the world economy. Even a mild recession could hit earnings hard.
  2. Capital Intensive BusinessesCK Hutchison operates capital hungry businesses such as ports, infrastructure, railroads, utilities etc. The large recurring capital expenditures can be a drag on returns-on-equity.
  3. Persona –CK Holdings is run by the highly-skilled investor Mr. Li Ka-Shing, the company benefits greatly from his tremendous business acumen; Mr. Li is 87.

Please read disclosure here before taking any action based on this post.

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