CK Hutchison Holdings Ltd Value Analysis

CK Hutchison Holdings Ltd Value Analysis

CKHH is a major conglomerate with interests in retail, ports, property, energy and telecoms.

During 2015 CK Hutchison Holdings Ltd was created as a result of several transactions that reorganised Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited.  The transactions merged certain assets and businesses into CKHH and simultaneously reallocated them between the CK Hutchison Holdings Ltd and Cheung Kong Property Holdings Limited on 3 June 2015.

As the reorganisation took place in the middle of a financial year there is not yet a full year of results for the new entity.  Therefore, the valuation of the common stock more difficult.

The reorganisation also means that there is no direct comparison with previous years.

It remains possible to make a value based analysis for the common stock.  CKHH provides two sets of results in the 2015 Annual Report.   CKHH gives the actual results as reported earnings and also gives a pro forma results.  Pro forma results are an estimate based on the assumption that all the businesses that were part of CKHH at the end of the year were part of CKHH throughout the whole year.

The most significant impact is on the earnings exhibit.  The earnings exhibit can be analysed as reported earnings and pro forma earnings.  The results of the analysis of the two earnings numbers provide a reasonable degree of comfort to a value investor at the current price.

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