New World Development

Future toll profit to bolster NWS

PUBLISHED : Thursday, 29 September, 2011, 12:00am
UPDATED : Thursday, 29 September, 2011, 12:00am


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NWS Holdings yesterday said it expected substantial profit contribution from its toll roads for many years to come, after its net profit for the fiscal year to June 30 beat analysts' forecasts.

The infrastructure subsidiary of Hong Kong-listed conglomerate New World Development posted a 15 per cent jump in net profit to HK$4.63 billion, beating a Bloomberg consensus forecast of HK$3.59 billion by four analysts.

The operating profit of the firm's toll road business enjoyed the strongest growth, up 118 per cent to HK$1.14 billion during this period, mainly because of a HK$387.5 million gain from the Tangjin Expressway.

'The Hangzhou Ring Road will contribute substantially to our earnings for a long time. It is our most significant acquisition, which will bring substantial value to our portfolio,' said executive director Brian Cheng Chi-ming. The ring road around Hangzhou, the capital of Zhejiang province, has yet to contribute any profit to NWS as the firm only acquired 59 per cent of the road for US$652 million on June 14.

This was NWS's biggest acquisition since its listing in Hong Kong in 2003. In the next three months, NWS has the option to raise its stake in the 103-kilometre ring road to 90 per cent for a further HK$2.8 billion, for which the firm has prepared a capital expenditure of HK$3 billion, Cheng said.

The total capital expenditure budgeted for this coming fiscal year is HK$7.2 billion, said NWS executive director Tsang Yam-pui, younger brother of Hong Kong Chief Executive Donald Tsang Yam-kuen. The firm's capital expenditure in the last fiscal year was HK$1.4 billion.

The operating profit of NWS's water business rose 28 per cent to HK$297.7 million during the year ended June 30.

The company operates water plants on the mainland and in Macau. The tariff increases in several mainland water plants boosted the profits of the water business.

However, the operating profit of NWS' energy business fell 16 per cent to HK$352.4 million, mainly because of rising fuel costs. The operating profit of the firm's port and logistics business edged up 1 per cent to HK$281.9 million during the period, while the operating profit of its services division rose 3 per cent to HK$1.99 billion.

As part of its ports and logistics business, the firm has a 30 per cent stake in China United International Rail Containers, a joint venture that operates a container rail network on the mainland.

Besides roads, NWS is looking at potential acquisitions in the water, energy and infrastructure sectors, Cheng said. As of June 30, NWS had HK$4.5 billion in cash, net debt of HK$2.16 billion and net leverage ratio of 7 per cent. It will pay a final dividend per share of 70 HK cents, less than its dividend per share of 95 HK cents in the previous fiscal year.