NWS considers making aircraft leasing core business
Infrastructure firm posts interim profit of HK$2.35 billion, up 17 per cent
NWS Holdings has been hit by the weakening of the mainland Chinese currency and tourist appetite for Hong Kong, but helped by its growing aircraft leasing business, with the infrastructure and services arm of New World Development posting a 17 per cent increase in profit to HK$2.35 billion for the second half of last year.
“If there were no depreciation of renminbi in the period, the profit attributable to shareholders would have increased by approximately 40 per cent instead,” the company said. Revenue rose 19 per cent to HK$14 billion but the mainland currency weakened by nearly 5 per cent in the second half of 2015.
The firm, controlled by Hong Kong tycoon Cheng Yu-tung, derived 61 per cent of its profit from infrastructure businesses and the rest from services – including operating duty free shops, Hong Kong buses and the Hong Kong Convention and Exhibition Centre. Attributable operating profit from ports and logistics, a business segment that accounted for 24 per cent of the total, grew 58 per cent to HK$588 million, mainly thanks to new income from its year-old aircraft leasing business Goshawk Aviation, which had 53 planes at the end of last year. “We may consider making it a core business,” chief executive Tsang Yam-pui said at a press briefing on Monday, adding that the business generated a steady return of 12 per cent.
Another deep-pocketed Hong Kong investor with a fledging aircraft leasing business is Li Ka-shing.
Goshawk, 40 per cent owned by NWS and 40 per cent by Cheng’s Chow Tai Fook, focuses on the leasing of young, narrow-body commercial aircraft and is expected to grow its fleet to 70 planes worth US$3 billion by June.
The firm’s yuan-denominated assets brought in an exchange loss of HK$266.6 million due to the mainland currency’s depreciation, the company said. Toll road operation, its biggest business segment with a 26 per cent profit contribution, was hardest hit, with profit down 8 per cent to HK$620 million. Tsang said the business saw healthy traffic growth and would have increased by 12 per cent without the currency impact.
In December, NWS completed an investment that made it a 12.55 per cent stakeholder in Chongqing Derun Environment, a firm with 30 billion yuan worth of assets and waste-to-energy power plants. Tsang said: “I have high hopes for our water business ... with Derun, we are now in the full spectrum of environmental businesses and not just water treatment, and that is expected to benefit from more nationwide environmental protection imperatives.”
Sixty per cent growth in its construction and transport business made up for a 19 per cent drop in NWS’s facilities management business. Sales at its duty free shops at the Lo Wu and Hung Hom border checkpoints suffered from Hong Kong’s waning attraction for mainland tourists. Tsang said there was continued growth at the Lok Ma Chau checkpoint, “but it was not enough to offset the decline in Lo Wu and Hung Hum”.