Hopewell sees smoother road ahead

PUBLISHED : Friday, 24 February, 2012, 12:00am
UPDATED : Friday, 24 February, 2012, 12:00am


Thomas Jefferson Wu, who heads two Hong Kong-listed companies controlled by his family - Hopewell Holdings and Hopewell Highway Infrastructure (HHI) - believes both will ride out the turbulent trading environment this year.

Wu said the potential for future car sales on the mainland and signs that Beijing was starting to ease lending restrictions boded well for the HHI, which operates toll highways on both sides of the Pearl River and, like most infrastructure companies, relies on significant borrowing.

'The outlook for HHI is very positive,' said Wu, son of Hopewell and HHI chairman Gordon Wu Ying-sheung. 'China has 18 million car sales a year - and Guangdong has a good share of that - and car ownership demand is still increasing.'

The company expects to complete the third phase of West Expressway two months early in the first quarter of next year, boosting toll revenue. The project will link Zhuhai to Zhongshan and onward to Guangzhou via the earlier phases.

'When Phase 3 West is completed, the time saving between Guangzhou and Zhuhai will be one hour,' Wu said. 'So there will be good demand for our highway.'

JP Morgan took a less bullish view after a site visit to HHI's Guangzhou-Shenzhen Superhighway, saying it was concerned 'less competitive pricing, longer distances, and severe traffic congesting during peak times' might cost the highway market share.

The bank expects HHI's net profit to drop 5.7 per cent to HK$961.3 million in the fiscal year ending in June. HHI's net revenue rose 16 per cent to HK$571 million, while net toll revenue grew 9 per cent to HK$1.22 billion, in the six-month period ending in December.

Hopewell Holdings, HHI's parent, saw its net profit drop 1 per cent to HK$1.83 billion in the six months ending in December, while revenue fell 2 per cent to HK$3.15 billion.

Hopewell attributed the fall in revenue to a slowdown in recognised sales of its Broadwood Twelve residential property project in Hong Kong and its Hopewell New Town property project in Guangzhou.

It says it has sold 50 of the 76 units at Broadwood Twelve at an average price of HK$25,300 per square foot. Some 57 townhouses and 345 apartments have found buyers in the last six months during presales at Hopewell New Town.

The Heyuan Power Plant, a joint venture between Hopewell and Shenzhen Energy suffered a 40 per cent drop in net profit to 72 million yuan (HK$88.6 million) in the last six-month period due in part to higher coal prices.