Goldman Sachs: CKH Holdings (00001) selling 49% stake in Vodafone Three is expected to increase earnings per share by 7% for the stock.

Goldman Sachs released a research report stating that CKH HOLDINGS (00001) announced yesterday (5th) that it has agreed to sell 49% of its stake in the UK telecommunications business VodafoneThree to its partner Vodafone for a cash consideration of 4.3 billion pounds. The transaction is subject to regulatory approval and is expected to be completed in the second half of this year. The bank believes that this move is not surprising, but the early sale compared to expectations may reflect the confidence of Vodafone management in the UK market outlook. The bank expects the transaction to bring CKH HOLDINGS 4.7 billion Hong Kong dollars in proceeds. Assuming that the company will distribute approximately 40% of such proceeds in the form of dividends, consistent with its profit payout ratio in the past, this would mean an increase of 0.5 Hong Kong dollars per share (compared to 2.31 Hong Kong dollars for the 2025 fiscal year). In terms of financial impact, VodafoneThree under CKH HOLDINGS recorded a post-tax loss of 49 million pounds from June to December last year, which translates to 84 million pounds or 890 million Hong Kong dollars year-on-year. Goldman Sachs estimates that without this loss and additional cash interest income from proceeds of the 4.3 billion pound sale, the transaction will increase the profit of the CKH HOLDINGS group by approximately 7% or 2 billion Hong Kong dollars at the benchmark level. The transaction will also reduce its net debt to total capital ratio from 13.9% at the end of the 2025 fiscal year to 8.8%. Goldman Sachs did not provide a rating for CKH HOLDINGS. The bank pointed out that in addition to selling its UK telecommunications business, media reports also indicate that the CKH HOLDINGS group is considering spinning off or selling its other telecommunications businesses to local major operators.