CK Hutchison Has Outperformed Year to Date, Defensive Attributes Helping

While it’s way too early to say that CK Hutchison, or CKHH, has reversed its relative underperformance of the past few years, its share price has held up relatively well year to date, gaining 9.4% versus a flat Hang Seng Index. We think this points to the company’s defensive attributes, which are mainly a sustainable positive free cash flow, share buybacks and active capital management. We currently maintain our HKD 80 sum-of-parts based fair value estimate, and we think the shares are attractive in the present volatile environment. We expect CKHH’s dividend per share, or DPS, to grow 31% in 2021 and 6% in 2022, which implies a current dividend yield of 5.5% and 2022 of 5.8%. This includes our assumption for an annual buyback equating to 1% of total shares.