NWS on the lookout for toll roads in China
Sector poised for pick-up, says the New World Development unit, following 24pc fall in profit
NWS Holdings, an infrastructure arm of New World Development, says it is seeking to acquire new toll roads on the mainland.
The company booked a 24 per cent year-on-year drop in full-year net profit to HK$4 billion. Core earnings increased 18 per cent after stripping out a HK$1.8 billion one-off gain from equity investment in the first half of last year.
"The worst time for toll-road operators on the mainland has passed," NWS executive director Tsang Yam-pui said yesterday. A rule introduced in July last year prohibits them from charging motorists using toll roads during four major holidays - 21 days a year in total.
Toll-road operations contributed 30 per cent of the company's operating profit, at HK$1.24 billion. But the holiday rule helped drag growth in operating profit down to 2 per cent, even as two toll roads in Guangzhou saw traffic growth of 17 per cent and 31 per cent, respectively.
Management said the toll-road business had bottomed out due to a pick-up in export growth and domestic trade on the mainland.
Executive director Tommy Cheung said the Ministry of Transport discussed extending toll-road operators' concession periods earlier this year to compensate them for the losses caused by the holiday rule.
The firm was searching for acquisitions in Guangdong and Hunan, Cheung said, but no deals had been finalised. "They will be big projects so as to achieve economies of scale," he said.
Operating profit in NWS's energy division rose 26 per cent year on year to HK$330 million as its power plants capitalised on the cheaper coal prices. Its water business saw an 8 per cent jump in profit to HK$389 million, while the ports and logistics division grew 10 per cent to HK$330 million on throughput growth in two container ports in Tianjin.
Facility management profit dropped 5 per cent to HK$1.1 billion due to the expiry of the firm's Hong Kong airport duty-free concession at the end of last year. NWS still operates duty-free outlets in Lo Wu and Hung Hom and manages the Hong Kong Convention and Exhibition Centre.