<Research>CLSA: CTF SERVICES (00659.HK) Poised for Potential Re-entry into SH-/SZ-HK Stock Connect Next Year, Supporting Valuation Recovery

The analyst rating from BOCOMI for CTF SERVICES is maintained as a "Buy" due to several key reasons: 1. Strong Financial Performance: The company recorded a 7% year-over-year increase in attributable operating profit, surpassing the broker's earlier forecast. The profit attributable to shareholders also increased by 4% year-over-year, and adjusted EBITDA climbed by 1% year-over-year, indicating solid financial health. 2. Growth in Key Segments: The growth in the financial services segment (CTF Life) significantly contributed to the overall performance, offsetting challenges in other divisions. 3. Attractive Dividend Yield: BOCOMI highlighted a dividend yield of over 8%, with projected yields of 8.4% and 8.8% for FY26-27, making the stock appealing for income-focused investors. 4. Valuation: The broker noted that the company's valuation is cheap relative to its attractive dividend returns, further supporting the "Buy" rating. 5. Target Price: The target price for the stock remains at HKD9.42, indicating potential upside from the current trading levels. Overall, these factors contribute to a positive outlook on CTF SERVICES, justifying the "Buy" rating.