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Peggy Sito

Cheung Kong Infrastructure Holdings (CKI) says cement and concrete operations in Hong Kong will continue to be its main income earners in the next two years because of slower short-term returns from China investments.

Managing director Kam Hing-lam said yesterday Hong Kong operations Green Island Cement (Holdings) and Anderson Asia (Holdings) performed well last year, producing 75 per cent of the group's net profits.

 The balance was from roads and power businesses in China.

 'Hong Kong operations will continue to be the major contributor of the 1996 projected earnings [of $728 million],' Mr Kam said, adding the situation would sustain in the following year.

 But profits from China investments would rise significantly in the medium term because more projects would start providing revenue, he said.

 Earnings contribution from the mainland division would also be enlarged with the company's proposed expansion, he said.

 Mr Kam said CKI had signed a letter of intent to undertake 50 per cent equity interest in the $2 billion Shantou-Chaozhou-Fenshuiguan highway in Guangdong province.

 CKI had also indicated its intention to invest in two 200 MW oil-fired electricity power generators in Guangdong, estimated to be worth $300 million.

 At the announcement of the initial public offering of CKI shares, Mr Kam said the proposed investments would be funded by the money raised in the flotation.

 The expansion would also be financed by the $1.8 billion injected by parent company Cheung Kong (Holdings).

  CKI will raise net proceeds of $3.61 billion through the sale of 297.8 million new shares at $12.65 each, representing 22.5 per cent of the enlarged issued share capital.

 Of the new shares, 90 per cent have been subscribed by international investors, with the remainder offered to the Hong Kong public today.

     Net proceeds will be increased to $4.15 billion if the company exercises the over-allotment option of a further 44.2 million shares.

 Additional shares will be made available if the Hong Kong offering is more than three times subscribed.

 CKI chairman Victor Li Tzar-kuoi, also the deputy chairman of Cheung Kong, was optimistic about the response to the offering in light of the results from the international placement.



CKI concrete, cement business propels income