StubWorld: PCCW's Irrational NAV Premium & Implied Stub

• FY25 results reaffirm PCCW Ltd (8 HK)‘s stub ops continue to burn cash. Deconsolidated net debt touches an all-time high. And HKT (6823 HK)‘s dividend pass-through % is trending south.

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Conclusions First

• PCCW does have a decent yield. But valuation-wise, it is trading full.

• For a parent company that has consistently spilled red ink at the stub level, I cannot fathom why PCCW would/should trade at a NAV premium.

• Unless, now that the deal for HKBN Ltd (1310 HK) has wrapped up (see HKBN (1310 HK): China Mobile’s Offer Now Open), PCCW or HKT is next in the cross-hairs.

• Probably the latter. And arguably inevitable, as discussed in If HKBN Gets Taken Out, Who’s Next?

• But that’s a BIG bet on timing.

• PCCW’s deconsolidated net debt is now at an all-time high.

• And by my calcs, the HKT (6823 HK) dividend pass-through % has been consistently trending down

• I would reverse the stub here.