HK 'priority choice' for Li Ka-shing's investment

Tycoon bullish over biz prospects of his companies in next 5 years

Tycoon Li Ka-shing is confident that all companies controlled by his family will grow over the next five years, provided that the global economic conditions do not deteriorate further.

"Unless there is (a) war or other huge unpredictable events happening in Europe, I am sure that the group's infrastructure, ports and telecommunication businesses will fare 100 percent better in the next five years," Li said at a press conference on Thursday.

Hutchison Whampoa Chairman Li Ka-shing (Right) looks at his son Victor during a news conference announcing Hutchison Whampoa Ltd's interim results in Hong Kong August 2, 2012. [Photo / Agencies]

"We exercise prudential management to guard (against) any unpredictability in the external macroeconomic environment," he said after announcing the interim results of his flagship companies Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd.

Hutchison Whampoa, the ports-to-mobile phones conglomerate, which has operations in 53 countries and employs more than 260,000 people, posted a 13 percent jump in recurring profit to HK$9.8 billion ($1.3 billion) from the HK$8.7 billion a year ago. That exceeded the market median expectation of HK$9.55 billion. The conglomerate announced an interim dividend of HK$0.55 per share, which remained unchanged from a year ago.

However, the conglomerate's net profit for the six months ended June plummeted 78 percent to HK$10.2 billion from the HK$46.2 billion a year ago due to a lack of one-time asset disposal gain. Last year's net profits were boosted by the spin-off its port assets in Hong Kong and southern China through the IPO of the HPH Trust, which raised HK$37.2 billion.

"In the first half, deteriorating economic conditions affected many of the markets and geographies in which we operate to varying degrees," Li said. "However, the group is well positioned for continued growth and will continue to invest and expand its core businesses."

Li also reiterated that the group would continue to invest in business projects in Hong Kong and the mainland. "If I could earn $100 overseas but only $80-90 in Hong Kong, I would still choose to invest in Hong Kong, as I love this place. I will consider Hong Kong as my priority choice in making investments."

Meanwhile, Cheung Kong (Holdings)'s first-half recurring profit also beat analyst estimates as rental income and the value of its investment properties increased.

Stripping out the property revaluation gains and the Hutchison Whampoa's profit contribution, Cheung Kong (Holdings)' underlying earnings dived 9 percent to HK$7.5 billion which was still better than the median market forecast of HK$4 billion to HK$6.6 billion. Cheung Kong (Holdings) will pay an interim dividend of HK$0.53 per share, the same as a year earlier.

However, the developer's net profit tumbled 54 percent to HK$15.4 billion from the HK$33.2 billion in the first half of 2011, while earnings were boosted by a HK$18.6 billion one-time gain, Cheung Kong (Holdings) said in a statement.

"With a net debt to net capital ratio of 6.1 percent as at June 30, Cheung Kong (Holdings) is poised to continue to bid for more land parcels in Hong Kong in the future. The company's land bank is sufficient for residential project development up to the next four years," Li said.

In July, the Cheung Kong (Holdings) had sold nearly 7,000 residential flats in Hong Kong, Macao, Singapore and the mainland that contributed nearly HK$32.4 billion cash inflows to the company.

Hutchison Whampoa shares have risen 5.5 percent so far this year, compared with a 6.8 percent decline in the benchmark average. Hutchison Whampoa's Thursday share price slumped 1.15 percent to HK$68.65 a share.

Meanwhile, Cheung Kong (Holdings) closed 1 percent lower to HK$102.3 per share on Thursday. The share prices have risen 11 percent this year, the second least in the seven-member Hang Seng Property Index, which gained 13 percent.

oswald@chinadailyhk.com