Hutchison Whampoa (OTC: HUWHY, Hong Kong Stock Code 0013) rose HK$1.20 to HK$81.90 in late trade Wednesday, after posting a 19% on-year increase in FY12 underlying profit to HK$26.82 billion, benefited from utility investments in Europe.
Goldman Sachs tweaked slightly its target price for Hutchison Whampoa to HK$100 from HK$97, and maintained its “buy” call. It said Hutch’s 2012 core net profit came in at HK$26.8bn, 7% above estimate. Goldman said Hutch’s valuation remains attractive at 35% NAV discount, which has not priced in CROCI improvement from 8% in 2012 to 9.4% in 2015.
Credit Suisse says that Hutchison Whampoa’s FY12 underlying earnings beat its forecasts by 11.5%, driven by lower-than-expected taxation. However, despite 19% growth in earnings, its DPS has been maintained, which “could be interpreted as a cautious outlook for FY13-14.” CS says Hutch’s growth profile should be supported by its China properties, retail, infrastructure and narrowing of losses from Australia; it revises Hutch’s FY13/14 earnings forecasts by 16%/12%, to factor in higher China properties booking. CS says Hutch is trading at 11.5X FY13 P/E and a 28% discount to its estimated NAV of HK$112 (HK$109.60 previously). “We believe the stock is undervalued,” hence keeping its Outperform call, with a higher target price of HK$112.00 vs HK$109.60.
JP Morgan raised its target price for Hutchison Whampoa to HK$90 from HK$85, and maintained its “overweight” call. The research house believes the investment case of Hutch remains solid despite a strong share price performance over the past months. It forecast 2012-2015 CAGRs of 4%, 8%, 11% for revenue, EBIT and net profit thanks to the healthy growth across the board, resilient European business and positive contribution from M&A. JPM added that valuation remains compelling given a 34% discount to NAV (versus historical average of 11%) and a 3% dividend yield.
Nomura expects Hutchison’s FY13 recurring EPS growth to accelerate to 18% as most global economies improve sequentially; while news flows from Europe macro front might remain an occasional swing factor to Hutch’s share price, “we view these as buying opportunities since Hutch has proven over the last two years that it could still deliver growth, even for its Europe operations.” Nomura says share price in the range of HK$75-HK$80 (representing 35%-40% NAV discount) offers attractive risk-reward, and it keeps the stock at Buy with a HK$96.40 target. Hutchison slipped 0.5% to HK$80.70 Tuesday pre-results.