Hutchison Whampoa

Hutchison Whampoa plans dual listing for AS Watson

Li Ka-shing hopes to spin off the health and beauty product retailer this year after flagship posts 20pc increase in net profit

PUBLISHED : Saturday, 01 March, 2014, 1:14am
UPDATED : Saturday, 01 March, 2014, 1:51am

Li Ka-shing says his telecommunications and retail flagship Hutchison Whampoa hopes to spin off its AS Watson retail business for a listing in Hong Kong and an overseas market this year, after reporting better-than-expected earnings for last year.

Hutchison's net profit rose 20 per cent from 2012 to HK$31.1 billion, driven mainly by its third-generation telecommunications services and retail business in Europe as well as its property unit in mainland China.

Net profit beat the market's consensus forecast of HK$29.7 billion.

Nomura International analyst Benjamin Lo said Hutchison "could have double-digit growth in its recurring profit in 2014 as its three driving engines - property, retail and telecommunications services - would continue to perform better".

Recurring profit before one-off property revaluation and disposal gains increased 17 per cent to HK$31 billion.

Li said Hong Kong should be one of the markets for a dual listing of Watson, the largest health and beauty product shop operator in China, Asia and Europe.

The retail business, excluding its French operation which is undergoing a refurbishment programme, reported 14 per cent growth in earnings before interest and tax to HK$11.8 billion last year.

Group managing director Canning Fok Kin-ning told a post-results briefing yesterday that Hong Kong would be a good choice for a listing.

"Hong Kong is quite liquid, with a lot of investors based here," Fok said.

However, he said no decision had been made on whether and where the retail arm would be listed.

It has been reported that Singapore and London are jostling to be the secondary listing venue for Watson.

The average valuation estimate for Watson from analysts is HK$195 billion, which would translate to nearly HK$50 unlocked value per Hutchison share, compared with the up to HK$15 embedded value at the present share price, Fok said.

Hutchison's property and hotel section reported 30 per cent growth in ebit to HK$13.6 billion.

The company's third-generation telecommunications service in Europe, H3G, saw 54 per cent growth in ebit to HK$4.8 billion, mainly due to the doubling of ebit in its British business and a 5.6 times jump in its Austrian operation on the completion of the acquisition of Orange Austria.

A HK$1.05 billion gain from the spinning off of Westports in Malaysia and a HK$958 million one-time gain on the completion of the Orange Austria acquisition were partly offset by HK$1.48 billion in losses at the company's Australian telecommunications service joint venture.

Hutchison will pay a final dividend of HK$1.70 a share, against HK$1.53 previously.

Shares in the firm gained 0.97 per cent to HK$ 104.60 yesterday as the market rose 0.04 per cent.