EARNINGS

CKI seeks new investments after windfall profit

CKI, Power Assets on acquisition trail after sizeable one-off gain from HK Electric sale

PUBLISHED : Friday, 25 July, 2014, 1:35am
UPDATED : Friday, 25 July, 2014, 5:22am

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Cheung Kong Infrastructure (CKI) and its associate firm Power Assets, the international utilities and infrastructure firms controlled by tycoon Li Ka-shing, are seeking investment opportunities after posting sizeable profit gains from the partial sell-down of the city's electricity generator Hongkong Electric.

CKI has identified "a number of potential acquisition opportunities in the global infrastructure arena, both in new and existing sectors and geographies," chairman Victor Li Tzar-kuoi said in a statement while announcing a 367 per cent year-on-year jump in net profit to HK$24.11 billion for the year's first six-months. The figure was 5.3 per cent below the HK$25.48 billion average estimate of analysts polled by Thomson Reuters.

It booked a 10-fold jump in profit from 38.9 per cent-owned Power Assets to HK$20.9 billion, thanks to a one-off gain from the latter's stake sale of Hongkong Electric, which was spun off as a listed trust firm called HK Electric Investments in January.

CKI's overseas operation booked a 5.2 per cent net profit rise to HK$4.11 billion, mostly from Britain, and maiden profit from its business in Holland, offsetting lower profits in Australia.

CKI engages in gas and power distribution, power generation, water supply and sewage treatment in Britain, gas and power distribution and transmission in Australia, waste management and power distribution in New Zealand, waste-to-energy projects in Holland, power generation in Canada, and toll roads and bridges on the mainland.

Power Assets posted a first-half net profit of HK$56.54 billion, up from HK$4.77 billion in the year-earlier period. Stripping out a HK$52.93 billion gain on the disposal of 50.1 per cent of Hongkong Electric, the sole power supplier for Hong Kong Island and Lamma Island, profit dropped 24.2 per cent to HK$3.62 billion.

To plug the profit gap, Power Assets said it "will continue to proactively search for suitable investment opportunities throughout the world, especially focusing on high-quality investments in stable, well-regulated power and gas markets … such as Australia, North America, UK and continental Europe."

The stake sale has cut Power Assets and CKI's exposure to the risks in Hong Kong's uncertain regulatory environment.