NWS seeks to splash cash for acquisitions overseas

Cheng family-controlled conglomerate with funds of more than HK$6b seeks acquisitions in Britain, continental Europe and Australia

PUBLISHED : Wednesday, 27 February, 2013, 12:00am
UPDATED : Wednesday, 27 February, 2013, 4:44am

Infrastructure and services conglomerate NWS Holdings, which was sitting on more than HK$6 billion in cash at the end of 2012, is looking at acquisitions in Britain, Europe and Australia, according to the company's executive director, Tsang Yam-pui.

"The company will leverage on its financial strength in seeking stable and recurring income streams," said Tsang, a younger brother of former Hong Kong chief executive Donald Tsang Yam-kuen.

The Hong Kong-listed company's cash totalled HK$6.5 billion in December, while its net debt was HK$12.2 billion and its net gearing ratio 31 per cent.

NWS, controlled by the family of the Hong Kong tycoon Cheng Yu-tung, has no investments beyond China.

The company will leverage on its financial strength in seeking stable and recurring income streams

It has 62 projects and two strategic investments in Hong Kong and the mainland in roads, energy, water facilities, ports and logistics.

Cheung Kong Infrastructure (CKI), a Hong Kong-listed infrastructure firm controlled by the Hong Kong tycoon Li Ka-shing, is also looking at acquisitions in Europe, Britain and North America, after acquiring electricity, water and gas companies in Britain since 2010. NWS signed a conditional agreement to establish a joint venture to provide port facilities and services in Xiamen, a city in Fujian province. It expected to book a gain of HK$600 million upon completion of the deal in the second half, Tsang said.

NWS will have a 13.8 per cent stake in this joint venture, with an option to increase it to 20 per cent within three years.

NWS will contribute 370 million yuan (HK$456 million) in cash to this joint venture. The company will also inject its 50 per cent stake in Xiamen New World Xiangyu Terminals and its 46 per cent stake in Xiamen Haicang Xinhaida Container Terminals into the joint venture.

For the six months ended December 31, 2012, NWS's net profit plunged 38 per cent to HK$2.11 billion, while revenue grew 15 per cent to HK$7.97 billion. The net profit drop was mainly due to a one-time dilution gain of HK$1.8 billion from the listing on the Hong Kong stock exchange of its mining subsidiary Newton Resources.

Excluding this dilution, the company's operating profit rose 11 per cent to HK$2.2 billion during the period. The operating profit contributed by NWS' road business rose 13 per cent to HK$691 million.

The operating profit of NWS' ports and logistics business grew only one per cent to HK$153 million during this period, while operating profit from water increased 3 per cent to HK$208 million and operating profit from energy rose 22 per cent to HK$110 million.

NWS will pay an interim dividend of 29 HK cents per share, less than its interim dividend of 50 HK cents per share for the same period in 2011.

Its share price fell 2.6 per cent to HK$14.30 yesterday.