Wheelock drives in
FOR what is basically an investment holding company with a new attitude, Wheelock, formerly World International, is proving to be a pretty sharp investment manager.
Of the $214.4 million operating profit scored by the group in the first half this year, $86 million came from its investment activities.
There will be more to come, and not just for Wheelock.
That figure was scored before the Biggs phenomenon hit town, and much of the money managed in-house by Wheelock is believed to be in Hong Kong.
That which isn't is either in US Treasury bills, which have not done badly, or in other regional markets, which have outperformed Hong Kong during much of the year.
Those markets have continued to outperform the territory, and another touch of the turbo-charger can be expected in the second half, unless the bottom drops out of the market.
The same goes for a lot of other companies which find themselves with spare resources from the benefits of low gearing and high cash flow, or recent avalanches of money from fund-raising operations, or both.
Analyst point out that companies such as Hysan Development, Cheung Kong and Hutchison are all beneficiaries of efficient cash management, and in the world markets this year cannot have failed to have seen an accelerating benefit.
This is a long way from the zaitech craze in Japan of the late 1980s, when the interest rate structure in Japan and demand from bond or warrant issues meant Japanese companies were being paid to borrow money, and were rapidly reinvesting it in high performance portfolios.
The Hong Kong windfalls will not be anything like those seen in Tokyo - although the eightfold increase in operating profits scored by Lane Crawford in the six months to the end of September showed how heavy the investment income can become.
However, shrewd Wheelock's investment managers, the group's road to reducing the dominance of its holding in Wharf is going to be a long one. About 70 per cent of the interim profits came from Wharf, and as fast as Wheelock Pacific grows, Wharf is going to easily keep pace, given the projects coming on-stream.
But although Wheelock Pacific, the development vehicle, may remain the little brother, like a lot of little brothers it will be packing on its own muscle.