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Citi Downgrades CKI HOLDINGS to Sell with Target Cut to $58

 Citigroup, in its report, downgraded CKI HOLDINGS(01038.HK)  -0.300 (-0.482%)    Short selling $51.05M; Ratio 35.211%   from Neutral to Sell, expecting the stock to be de-rated amid an interest rate rise cycle with the Federal Reserve guiding to raise the rates three more times in 2017. Acquisitions in the UK, being CKI's largest profit source, are also more challenging after Brexit, with potential GBP depreciation. Citigroup's target price on the stock is cut from $68.5 to $58.

The broker said CKI will be a victim in a rising interest rate cycle as its historical share price movement has 86% negative correlation with USD 10-year bond yield. The broker also raised the discount rate of CKI due to rising interest rate. Also, the group recently failed in bidding for assets sold by National Grid, and the broker worried that might lessen its chances of winning new assets in the UK

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