Citigroup upgraded CK ASSET's rating to "Buy" and raised the target price to HKD 54.55

Citigroup's research report indicates a positive view on CK ASSET (01113.HK) regarding the sale of a minority stake in the UK railway project and the transaction involving UK Power Networks (UKPN), believing it demonstrates the group's ability to profit from investments and signals a potential shift in capital reallocation priorities.

Additionally, Citigroup has raised the pricing by 5% on the latest price list for the group's project "Blue Coast." The delayed launch of the "Victoria Blossom" project also seems to align with the current improving market conditions. This may imply that after CK ASSET made a provision of HKD 2.3 billion for the Wong Chuk Hang and Kai Tak projects, there is upward potential for development project profit margins. Furthermore, new projects expected to be launched this year include 21 Po Lo Road, Kam Tin, To Kwa Wan, and Yuen Long, which are anticipated to involve a total resource of HKD 23.7 billion, likely supporting year-on-year growth in contract sales in Hong Kong.

In mainland China, Citigroup feels reassured by CK ASSET's gradual sales pace, believing the group is likely to maintain pricing power. Although the leasing market for office buildings in Hong Kong (with the expected rental rate of the Two International Finance Centre rising to 30%) and retail properties remains challenging, the rental market for overseas residential properties remains robust.

Citigroup believes potential positive catalysts for the group may include the potential reinvestment in Hong Kong development properties (which Citigroup considers timely) or enhanced shareholder returns (dividends or share buybacks; proceeds from the sale of UKPN shares). The stock rating has been upgraded from "Neutral" to "Buy," with the target price raised from HKD 39 to HKD 54.55