Hopewell profit acts as a bridge
Firm records 31pc surge in earnings as it awaits state approval for link to Zhuhai
Toll road operator Hopewell Highway Infrastructure has boosted its reserves for the long-awaited Hong Kong-Zhuhai-Macau bridge project after delivering a forecast-beating 31.1 per cent jump in interim profit to $563.79 million.
Despite the recent emergence of an underwater tunnel between Zhongshan and Shenzhen as a possible alternative that some experts say could scuttle the bridge project, managing director Thomas Jefferson Wu yesterday said the group was eagerly awaiting central government approval for the 29km link, estimated to cost as much as $60 billion.
'We saw encouraging progress recently that 23 out of 25 items on the feasibility study of the project have been completed,' Mr Wu said, while announcing interim results of the company and its parent firm, property developer Hopewell Holdings.
'As for our preparation for the possible investment, we have advantages in terms of financial resources, technology knowhow and experience.'
He pointed out that the ultimate cost of the proposed bridge depended on the outcome of the study.
The remaining key issues to be resolved are thought to be the location of immigration checkpoints and environmental concerns.
After more than two years of feasibility studies, Guangdong Development and Reform Commission director-general Chen Shanru last week said he hoped construction of the project could start next year.
In the six months to December last year, Hopewell Highway's asset portfolio - Guangzhou-Shenzhen superhighway, a ring road in Guangzhou and the first phase of Western Delta expressway - benefited from massive economic growth and rising car ownership in the Pearl River Delta. Net toll revenue increased 15.9 per cent to $859.86 million.
The company, which had 71 per cent of its borrowings denominated in US dollars and 29 per cent in yuan, saved interest costs from the appreciation of the yuan.
The promising results prompted the group to raise interim dividend 12.1 per cent to 11.5 cents per share. Earnings per share were up 30.9 per cent at 19.52 cents.
Both figures were ahead of analysts' forecasts.
Hopewell Highway's financial health improved, with net cash of $2.5 billion, annual operating cash inflow of about $1 billion and a $3.6 billion syndicated loan facility.
Excluding future investment in the bridge project, Mr Wu said Hopewell Highway would have sufficient cash resources to meet capital requirements of $7.75 billion to build the second and third phases of the Western Delta expressway and to widen the Guangzhou-Shenzhen superhighway.
Equity investment required for this financial year to June would be $247 million and $511 million next year, he added.
Hopewell Highway's strong contribution and gains from asset disposals drove the earnings before interest and taxation of its parent Hopewell Holdings 11 per cent higher to $699 million on $1.25 billion turnover in the half-year period. Net profit was 11.4 per cent lower at $1.11 billion due to a smaller exceptional gain of $473 million against $900 million previously.
Executive director Andy Cheung expected a further gain of $80 million from divesting highways in Shunde and $120 million from a defunct power project in Indonesia in the second half.
Hopewell Holdings' interim dividend was raised to 36 cents per share from 12 cents.
