Shares of CK Hutchison Holdings ( CKHH ), the flagship of the corporate empire founded by retired Hong Kong billionaire Li Ka-Shing, have surged over 30% in the past two days after the conglomerate sold its stake in two Panama Canal ports to a BlackRock-led consortium amid pressure from US President Donald Trump.

Overall, the deal covers CKHH’s 80% interests in 43 ports in 23 countries outside of China, which have a total enterprise value of US$22.8 billion.

“Prior to the announcement of the sale, CKHH's total market capitalization was US$19 billion with an enterprise value of US$37 billion, so this sale would be significant,” Dan Baker, senior equity analyst at Morningstar, said in a note on March 5, a day after the sale was announced. “Our previous valuation for CKHH's ports business was only US$10.5 billion so the sale greatly exceeds our expectations.”

The company’s net debt ratio decreased from 25% in 2019 to 17% in June 2024. “We believe the company could distribute most of this windfall to shareholders, which could lead to a special dividend of over HK$25 ( US$3.21 ) per share," says Baker.

Morningstar has increased the company’s fair value to HK$67 from HK$61 previously. Considering that the share price had steadily declined from over HK$120 in mid-2015 to just below HK$40 prior to the announcement, it believes the stock is now in “five-star territory”.

The shares were trading on a price/earnings ratio of just over 6x with a dividend yield of 6.5%. “Even for a company with low forecast growth, we see these valuation metrics as undemanding,” Baker adds.

In his address to the US Congress on Wednesday ( Hong Kong time ), Trump hailed the BlackRock-led deal on the Panama ports, stressing that the US is “reclaiming the Panama Canal”. The American leader has complained that Chinese control of the ports represented a national security threat.

In response, Panama’s President Jose Raul Mulino accused Trump of lying, stressing that his government will not negotiate the return of the canal to US control.

The Panama ports deal is subject to government approvals and due diligence from the buyer.