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Cheung Kong lifts earnings 10pc

Cheung Kong (Holdings), Li Ka-shing's investment flagship, posted a 10 per cent rise in net profit to $11.12 billion last year, thanks to a strong performance by its 44 per cent owned associate Hutchison Whampoa.

Operating profit before the Hutchison contribution slumped 34.4 per cent to $2.79 billion from $4.26 billion in 1994.

The overall result fell within market forecasts, which ranged from $10.2 billion to $12.2 billion.

Analysts said the group's operating businesses performed in line with expectations but the contribution of Hutchison, which boosted net profit 19.3 per cent to about $9.57 billion in the same period, was higher than some of their forecasts.

Cheung Kong's turnover for the year to December fell 18.3 per cent to $12.12 billion.

He was happy with the profit growth, Mr Li said: 'I am very satisfied with the earnings growth we have achieved amid the difficult period we experienced last year.' Earnings per share rose 10 per cent to $5.06 from $4.60 in 1994.

Together with the interim dividend of 30 cents a share, directors declared a full-year dividend of $1.20 per share. This represented a 9 per cent rise on the $1.10 a share paid for 1994. The company's share price closed down 25 cents at $55 yesterday. Cheung Kong has frequently been criticised in the past for keeping its shareholders in the dark about the millions of dollars worth of stocks and bonds it trades. Yesterday, there was even less information disclosed than in previous years.

The company did not give a clear profit breakdown of its full-year result, but Mr Li said a gain of about $778 million, or 7 per cent of net profit, came from treasury investments.

Contribution from Hutchison accounted for more than 38 per cent of net profit while $570 million came from subsidiaries Anderson Asia and Green Island Cement Group.

'Treasury investments will continue to drop in the coming years because they are not the group's core business,' Mr Li said.

Major earnings still came from development income, mainly from the sale of Kenswood Court.

The developer sold about 3,000 units below the prevailing market level in Kenswood Court in the first half.

Other development income came from the sale of flats in the fourth phase of Laguna City in Lam Tin and the Oasis - the fourth phase of South Horizons in Ap Lei Chau.

Mr Li said he was optimistic about the group's prospects for this year in view of the recovery in the property sector.

'Property sales are expected to be encouraging in 1996, with more than $6 billion already secured in the first three months,' he said.

Analysts said the group's earnings growth potential would be limited because there would be only a small rise in the floor area completed in this accounting period.

DBS Securities property analyst Winnie Chiu said that she expected Cheung Kong to book two million sq ft of completed floor area this year.

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