Analysis for informational purposes only. Capital at risk.

Hong Kong’s Cheung Kong Group has been actively executing its “Art of the Deal” playbook.

After its recent sale of UK Power Networks, it is now selling 49% stake in the VodafoneThree UK telecom business to Vodafone for £4.3 billion.  

While markets occasionally misprice the group as a passive asset holder, recent transactions reinforce our core thesis: the conglomerate operates as a highly disciplined, counter-cyclical capital allocator.

The Evolution of Three UK

• Origins (2003): After selling its stake in Orange in 1999, Hutchison used the proceeds to purchase a UK 3G license, launching Three UK in 2003 and initiating its broader European expansion.
• The Merger (2023): CK Hutchison (1 HK) and Vodafone merged their UK operations into a 49%/51% joint venture. The combined entity, VodafoneThree, captured an estimated 30% of the UK retail mobile market, overtaking competitors like O2 and EE.
• The Exit (May 2026): Executing a pre-agreed option from the 2023 merger, Vodafone paid CK Hutchison £4.3 billion to acquire the remaining 49% stake and take full ownership of the network.

A Master in Deal Making

Over the past three decades, CK Group has consistently demonstrated the ability to establish or acquire assets at low valuations and execute exits at peak market multiples.

• The Orange UK Sale (1999): After launching the network in 1994, Hutchison Whampoa sold its 44.81% stake in Orange to Mannesmann for $14.6 billion at the peak of the European telecom boom in 1999. This allowed the group to exit prior to the expensive 3G spectrum auctions and subsequent market correction.
• The Hutchison Essar Exit (2007): Having entered the Indian telecom sector in 1992, the group built Hutchison Essar into a premier operator before selling its 67% stake to Vodafone for $11.1 billion. This exit immediately preceded a prolonged period of intense price wars and margin compression.
• “The Center” Sale (2017): CK sold a 75% stake in the 73-storey Hong Kong office tower for HK$40.2 billion ($5.15 billion), setting a global record for a single office building transaction. The sale crystallised returns before shifting macroeconomic conditions triggered a prolonged downturn in the local commercial real estate market.
• The European Telecom Tower Sale (2020): CK sold its European telecommunications tower assets to Spain’s Cellnex Telecom for €10 billion, recording a net profit of approximately €6.6 billion.
• UK Power Networks (2026): In February 2026, CK sold UKPN to France’s Engie for £11 billion. Including £4.4 billion in dividends over the years, the cash return on UKPN exceeds 6 times the initial investment (£2.6 billion) over 16 years. Beyond favourable market timing, this premium valuation was driven by a fundamental operational turnaround, elevating UKPN from low regulatory ratings in 2010 to ‘Utility of the Year’ in 2025.

The Gem in CK Hutchison

CK Hutchison operates a diversified global business portfolio covering Ports, Retail, Infrastructure, and Telecom. Geographically, the UK and other European countries accounted for 55% of EBITDA in 2025, while HK/China exposure sits at only about 5%.

• Ports: CK Group, via Hutchison Ports (NS8U.SI), is one of the world’s largest independent port operators, managing over 50 ports across 24 countries. However, its recent attempt to sell its international port assets has faced severe geopolitical friction and ongoing uncertainty, highlighted by its Panama Canal terminals being stripped by the Panamanian government in early 2026.
• Retail: The AS Watson Group is the world’s largest international health and beauty retailer, operating over 17,000 stores globally under flagship brands including Watsons in Asia, and Superdrug, Kruidvat, and Rossmann across the UK and mainland Europe. This segment acts as a cash-generative engine, as its health and personal care products offer strong defensive characteristics against economic cyclicity.
• Infrastructure: Managed largely through CK Infrastructure (CKI), the group holds diversified investments across energy, transportation, water, and waste management. These assets operate as essential monopolies across Hong Kong, mainland China, the UK, Europe, Australia, New Zealand, Canada, and the United States.
• Telecom: This division operates under the “Three” brand across Europe and Asian markets. Given the capex-intensive nature, CK Group adopts an active capital management strategy, forming strategic joint ventures and executing asset monetisations, to extract maximum value and mitigate operational risks.

What’s the Next Deal?

Following the recent sales of VodafoneThree and UK Power Networks, the market is anticipating CK Group’s next “deal”.

• The AS Watson IPO: The group is reportedly considering a dual listing of its retail arm, AS Watson, in Hong Kong and London. This move could potentially monetise a retail footprint of over 17,000 global stores. To recap, the retail segment accounted for 16% of group EBITDA in 2025.
• Further Telecom Sale or IPO: The group is also reportedly considering selling more telecom assets or spinning off its remaining global telecom business in London and Hong Kong. To recap, the telecom segment accounted for 24% of group EBITDA in 2025.
• The Port Sale: The Group’s attempt to sell a majority stake in its global ports business remains suspended due to diplomatic deadlock. Should stakeholders ultimately reach a compromise, this transaction would unlock the asset value.
• UK Infrastructure Targets: CK is reportedly seeking a £1 billion bridge loan to acquire UK smart-meter assets from Macquarie. In addition, the distressed UK water sector and the European renewable energy industry could serve as potential targets for the group’s massive liquidity pool.

Cash is King: The Asset-Light Pivot

The management currently holds a conservative view of the global macroeconomic environment with a clear objective: maximise cash reserves.

The sale of UK Power Networks and VodafoneThree stake aligns with this strategy.

By liquidating heavy, capital-intensive operations, the group is recycling capital, strengthening the balance sheet and providing the flexibility to pursue future investment opportunities.

CK Hutchison (1 HK) had HKD151 bn cash and liquidity investments at end-2025. On a pro-forma basis, the VodafoneThree sale would increase its reserve by about 30%.

Geopolitical De-risking

Looking at its recent asset sales and potential “deal pipeline”, CK Group is also reducing geopolitical risk.

Telecommunications are increasingly classified as national security assets, leading to political scrutiny for foreign-linked owners like the CK Group. By exiting the UK telecom market and rotating that capital into less politically sensitive sectors, CK Group could de-risk its business portfolio.

Furthermore, spinning off and dual-listing major operations in Western markets like London serves a defensive purpose. By anchoring these entities within Western capital markets, CK Group establishes a globally diversified shareholder base. This multi-jurisdictional ownership structure serves as a hedge against potential geopolitical friction.

This article is a “periodical publication” for information only and is not investment advice or a solicitation to buy or sell securities. This article does not constitute a “personal recommendation” or “investment advice” under UK FCA regulations. Investing in equities involves significant risk. The author holds NO position in the securities mentioned. There is no warranty as to completeness or correctness. Please do your own due diligence or consult a licensed financial adviser. Please read the Full Disclaimer before acting on any information. Images created with the assistance of Gemini AI.

Article provided by Asia Pulse.

JD Sports has delivered a resilient set of full-year numbers, with the standout being a clear improvement in North America and a 36% jump in free cash flow to £462m.

Investors will hope today’s figures show JD Sports is joining a small cohort of underperforming FTSE 100 stocks that are showing signs of stabilisation after a prolonged rocky period.

JD Sports shares rose 4% after reporting that total sales rose 11.7% to £12.66bn, with organic growth of 2.1%. This may be seen be some as a respectable result given the tough consumer backdrop. LFL sales were -2.1%, in line with guidance.

“JD Sports hasn’t kicked off the year in style, but there were early signs of improving trends in its largest region, North America. On the face of it, total sales growth of 11.7% in a tough retail market looks impressive,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“But stripping out the impact of its Hibbett and Courir acquisitions, organic sales growth came in at a more slender 2.1%. The Middle East conflict hasn’t had a direct impact on JD Sports so far, given its lack of presence in the region, but there’s potential for it to weigh on consumers’ confidence and spending power going forward if energy prices remain elevated.”

As Chiekrie alludes to, the most encouraging signal is that North America, the group’s largest region at 38% of sales, returned to LFL growth in Q4 after steady improvement throughout the year.

Organic growth there came in at 3.2%, with online up a punchy 12.2% and apparel sales rising around 22%. Excluding the standalone Finish Line stores being wound down, North America LFL was positive at +1.2%.

Europe also pulled its weight with organic growth of 4.2% and apparel up around 10%, while Asia Pacific delivered 8.5% organic growth and exited the year with positive LFL momentum. The UK was the soft spot at -2.5% organic, with the ‘fewer, bigger, better’ store strategy still bedding in.

Investors will be pleased to see that despite ongoing concerns about the growth trajectory, JD are stepping up capital returns. The dividend rises 20% to 1.20p, and a £200m rolling annual share buyback has been launched, alongside a new three-year cumulative free cash flow target of more than £1.4bn through to FY28.

But the outlook is still a concern. The demand picture is far from certain, and JD’s reliance on Nike products is likely to be a headwind in the near term.

“JD Sports is heading into FY27 with little growth expected, as external pressures continue to weigh on the business,” said Yanmei Tang, AVP at Third Bridge.

“Our experts say factors like US tariffs, geopolitical tensions and weak consumer confidence are all outside JD’s control but are hitting demand. At the same time, Nike’s struggles are a key risk, given JD’s reliance on the brand.”

Yang continued to say “that in a no growth environment, JD’s focus will be on costs and efficiency. This includes using more automation and tightening operations to protect margins.”

Journeo has won a US$1.2m purchase order through its Infotec subsidiary to supply display systems for the Massachusetts Bay Transportation Authority’s network in Boston, awarded by Outfront Media Group.

The MBTA is one of the largest transit operators in the US, handling around 880,000 weekday passenger journeys and running the country’s third-busiest light rail system, with annual ridership north of 270 million.

The order covers a newly developed display format designed and engineered at the Group’s Journeo Design Centre, incorporating high-performance display tech and embedded systems for remote diagnostics and long-term asset performance.

This builds directly on Journeo’s recent platform display deployment for New York’s MTA, cementing a growing North American footprint.

Deliveries have already begun and are scheduled to be completed through 2026.

Russ Singleton, Chief Executive Officer of Journeo plc, said:”This order demonstrates the continued expansion of our North American operations and reflects the strength of our design, engineering and support capabilities in passenger transport environments. We are pleased to support OFM and the MBTA with a solution specifically developed to meet the operational demands of major transit networks.”

Today’s deal is the latest in a string of new business announcements by Journeo, including a £2.4 million contract with a major utility firm announced in March.

Cornish Metals has successfully closed an oversubscribed US$210m bond placement, securing the funding it needs to push ahead with construction of its South Crofty tin project in Cornwall.

The company has previously secured a cornerstone investment from the UK’s National Wealth Fund, underscoring the calibre of the South Crofty operation.

The round announced today was six-year senior secured bonds carrying a 13.5% coupon paid quarterly, with an issue price of 98% and maturity at 103.5% of nominal.

Helpfully for cash flow during build, there are no principal repayments for the first 48 months, after which quarterly amortisation of 5% kicks in alongside a 60% bullet at maturity.

The level of demand was strong, further demonstrating the quality of Cornish Metal’s asset. The placement was significantly oversubscribed, drawing in international institutional money and natural resource specialists across Europe, North America and beyond.

The funding clears the runway to advance South Crofty toward production and re-establish UK tin supply at scale.

Don Turvey, CEO of Cornish Metals, said: “We are very pleased to have successfully completed this US$210 million bond fundraising, securing the debt portion for the South Crofty project financing. We are delighted to welcome our new bondholders to the Cornish Metals story, and we are grateful for the continued support of our existing shareholders.”

“Project financing is progressing well and we expect to be fully funded and to announce the final investment decision for the South Crofty tin project this summer. With strong stakeholder support, robust economics and clear development momentum, we are well positioned to advance South Crofty towards production in mid-2028 and to deliver a secure domestic supply of tin for the western world.”

Cornish Metals aims to have the South Crofty mine back in action by mid 2028 and has plans to expand the resource with a drill program that could significantly increase the mine life.

US markets are home to the world’s hyperscalers, chip makers and neocloud companies at the forefront of the AI revolution.

But that doesn’t mean investors in UK-listed equities can’t get a piece of the action by selecting companies exposed to AI’s expansion. In many cases, this exposure comes via diversified business models that are increasingly benefiting from AI.

We look at three FTSE 100 companies that offer investors the opportunity to capitalise on the boom in AI adoption.

Rolls-Royce

We all know Rolls-Royce as an engine maker, but the FTSE 100 firm also offers one of the more compelling and arguably underappreciated routes to AI exposure in the London market through its power business, which is set to expand with the rollout of its small modular reactor (SMR) business.

Each Rolls-Royce SMR is designed to generate 470MW of low-carbon baseload power, equivalent to around 150 onshore wind turbines and capable of running for at least 60 years, with components built in UK factories and assembled modularly on site to compress construction timelines.

With hyperscalers increasingly seeking dedicated, grid-independent clean power for AI training and inference workloads, SMRs are emerging as a credible long-term solution to the energy bottleneck constraining data centre growth.

In the near term, Rolls-Royce already serves the hyperscale market through its diesel and gas generator portfolio, providing a current revenue stream from AI infrastructure as the SMR opportunity matures.

Rolls-Royce’s power business currently accounts for around 25% of its total revenue. It will be fascinating to see how this develops in the coming years.

Polar Capital Technology Trust

Polar Capital Technology Trust has positioned itself as one of the most concentrated plays on artificial intelligence available to UK retail investors.

Managed by Ben Rogoff since 2006, with Alastair Unwin as deputy, the trust has delivered NAV total returns of 744% over the past decade against its Dow Jones Global Technology benchmark return of 600%.

Over the past year alone, the NAV is up 62.75% versus a benchmark return of 31%, according to their latest fact sheet.

These gains are a direct result of their focus on AI. NVIDIA is the single largest position at 10.3% of assets, followed by Alphabet (6.2%), TSMC (5.4%), Apple (4.7%) and Broadcom (4.6%).

Meta, AMD, Microsoft, Samsung Electronics and KLA round out a top ten that accounts for 43.7% of the portfolio across 96 holdings.

Semiconductors and semiconductor equipment alone make up 37.3% of sector exposure, with electronic equipment and tech hardware adding a further 22.3%.

Having had the pleasure of speaking with the managers of the FTSE 100 investment trust, we know they live and breathe artificial intelligence and are attuned to the industry’s changing face. The results speak for themselves.

SEGRO

SEGRO, the purveyor of big box warehouses, may not jump immediately to mind as a way to play AI. But these spaces are increasingly being taken up by data centre firms, which is helping to drive growth.

SEGRO has made significant strides in its data centre strategy during the first quarter of 2026, signing a 30,000 sq m powered shell pre-let on the Slough Trading Estate and securing planning approval for its first fully fitted data centre, a 56MW facility in West London.

The group is also progressing infrastructure works ahead of a major power upgrade in Slough, reinforcing its position as a critical landlord for the AI and cloud computing infrastructure boom. With hyperscaler demand for power-secured sites continuing to outstrip supply across Europe, SEGRO’s land bank in key digital hubs positions it as a strategic beneficiary of structural growth in compute capacity.

Beyond data centres, SEGRO reported a strong operational start to the year, with £23 million of new headline rent contracted, including £12 million from development lettings.

EnergyPathways (LON: EPP) will be awarded a gas storage licence by the North Sea Transition Authority for its MESH project. It covers up to 60 salt storage caverns. This is part of a project in the East Irish Sea. The gas storage facility could double the UK’s gas storage capacity. The share price jumped 15.4% to 9p.

Online gaming marketing business B90 (LON: B90) reported results in line with the recent trading statement and management intends to use the AI performance marketing technology it has developed to move into new sectors. Revenues more than doubled to €7.2m and pre-tax profit was €1.1m, up from €700,000. Importantly, there was €603,000 in cash generated from operations and net cash was €1m at the end of 2025. Development costs are expensed and the cash pile will continue to grow. Longer-term, moving into new sectors should boost growth. The share price rebounded 14.6% to 2.35p, which is around eight times forecast earnings.

Yet another upgrade for Ramsdens (LON: RFX) following the third trading statement in three months. Guidance for 2025-26 pre-tax profit has been upgraded from £24m-£28m to £28.5m-£31.5m. The gold buying operations are a part of the reason, but jewellery retail and pawnbroking are also doing better than expected. Foreign exchange is slightly weaker than expected due to lower margins and it could be hit by the Middle East conflict if flights and holidays are cancelled. If gold buying volumes continue at the current level, then there could be a further upgrade later in the year. The share price increased 8.44% to 417.5p.

Union Jack Oil (LON: UJO) has says the Crossroads well was spudded on 5 May. Drilling should last ten days. Union Jack Oil has a 43% interest. The share price improved 10.1% to 4.35p.

Driver safety technology developer Seeing Machines (LON: SEE) says automotive volumes more than doubled in the third quarter compared with the previous quarter, Royalty revenues in the quarter were greater than for the whole of the first half. There are 6.1 million cars fitted with Seeing Machines technology. There should be a positive EBITDA in the second half. The share price rose 9% to 4.5125p.

Ascent Resources (LON: AST) has received an update from the International Centre for Settlement of Investment Disputes concerning Energy Charter Treaty claim against the Republic of Slovenia. The announcement confirms that the arbitration tribunal has reached an advanced stage and that an award is expected to be issued to the parties in June. The share price gained 7.2% to 0.67p.

FALLERS

Biopharmaceutical company Avacta Therapeutics (LON: AVCT) is presenting new comparisons of preCISION payload release via AVA6103. The data suggests that the treatment could improve options for cancer patients. Other data indicates effectiveness in combination with antibody drug conjugates. The share price fell 2.6% to 75p.

Invinity Energy Systems (LON: IES) is successfully reducing the cost of the Endurium vanadium flow battery technology and making other cost savings. A contract with a Hungarian customer has been delayed and a potential US contract will take longer than expected to contribute. Revenues guidance for 2026 has been reduced to £13m and the loss could be £25m. Cash should still be £7m at the end of 2026. The share price dipped 1.47% to 16.75p.

The FTSE 100 surged on Wednesday as traders cheered apparent progress toward ending the Middle East conflict.

Global equities reacted positively to a series of comments by US officials that signalled a de-escalation in tensions between the US and Iran. Marco Rubio said that the offensive stage of the conflict was over, while Trump’s comments suggested he was confident a deal with Iran could be struck.

The FTSE 100 was trading 2.2% higher at the time of writing.

Today’s move shows just how sensitive equity markets still are to developments in the Middle East. And how desperately traders want to see a deal between the US and Iran. 

“The market is celebrating an apparent late-night TACO Tuesday as the US pauses its plan to escort commercial ships through the Strait of Hormuz to focus on negotiations with Tehran,” said AJ Bell investment director Russ Mould. 

“A ceasefire which seemed to have been stretched to breaking point appears to be just about holding up. Hopes for de-escalation have been renewed by the latest developments as Donald Trump declares ‘Project Freedom’ to be done and dusted. 

“A rally for stocks and bonds has taken hold and oil prices have eased back from yesterday’s highs. However, oil is still comfortably in the $100-plus per barrel territory, which is worrying for inflation.”

But these worries had taken a back seat on Wednesday with 90 of the FTSE 100’s constituents trading in positive territory at the time of writing.

Fresnillo was the FTSE 100’s top riser as precious metals gold and silver rallied on overnight developments. Fresnillo surged 9%, but was still way below recent highs.

Rolls-Royce was 8% higher as the engine maker reacted positively to talks of a ceasefire. There were also gains for IAG, which shared the same sentiment.

The risk-on trade helped mining stocks higher, with Antofagasta jumping 8% and Anglo American climbing 7%. Housebuilders joined the party, with Persimmon and Barratt Redrow both adding around 5%.

Diageo issued quarterly performance data on Wednesday showing the group was still struggling with its North American business, where sales fell again. But it was a slightly better picture for the rest of the world with strength in LAC and Africa. Investors seem to think Diageo are turning a corner and shares rose 4% on Wednesday.

“Diageo’s Q3 trading update this morning shows tentative signs of stabilisation after a bumpy period, but the group is not out of the woods yet,” said Adam Vettese, market analyst for eToro.

“Organic net sales edged 0.3% higher in the quarter, a welcome improvement on the H1 decline. This was down to strong double-digit growth across Europe, Latin America & Caribbean and Africa, helped by Easter timing and World Cup stocking.”