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BROKER CALL - Cheung Kong target price raised to 140.81 hkd - Citigroup
HONG KONG (XFN-ASIA) - Citigroup raised its target price on Cheung Kong (Holdings) Ltd to 140.81 hkd from 134.19, factoring in higher valuations for unit Hutchison Whampoa Ltd.
It kept its "buy" rating on the Hong Kong developer, also citing undervaluation.
Citigroup noted that Cheung Kong is now trading at 26 pct to its net asset value (NAV), much wider than that of competitors such as Sun Hung Kai Properties Ltd and Sino Land Co Ltd.
In a research note sent to investors yesterday, the US house raised its NAV estimate for Hutchison by 8.50 hkd to 99.63 hkd from its previous estimate to reflect its latest China property acquisitions and the sharp increase in the value of its holdings in Husky Energy.
Citigroup also raised its 2008 and 2009 earnings per share estimate for Cheung Kong by 20.2 pct and 4.2 pct, respectively, to 7.305 and 11.63 hkd.
"Cheung Kong is our preferred Hong Kong developer as it has been astute in adopting different strategies for its different property projects," Citigroup said.
Shares of Cheung Kong traded up 4.2 hkd or 3.38 pct to close the morning session at 128.5.
Source: XFN