Cheung Kong Infrastructure Holdings (CKI) said profit in the first half of this year rose 20.1 per cent from a year earlier to $1.23 billion. Earnings were bolstered by a steady contribution from an associated company, Hongkong Electric Holdings, and by improved performances from mainland investments, it said. The earnings growth, markedly slower than the 195.4 per cent surge in the year-earlier period, did not surprise analysts. The sharp profit growth achieved in the year-ago half was helped by a strong first-time contribution from 36.1 per cent-owned Hongkong Electric, analysts said. In anticipation of fewer mainland acquisitions, analysts had expected CKI to post earnings growth of less than 20 per cent this year. But they said long-term growth prospects could be promising because CKI was well positioned to capture suitable investments. Chairman Victor Li Tzar-kuoi said CKI's financial position was strong. He estimated the company's debt-to-equity ratio at 10 per cent. 'Compared with those companies bearing a high gearing, we are in a better position to capture good investment opportunities,' he said. Mr Li said many companies, hit hard by the regional crisis, had slowed the pace of their investments in the mainland and throughout the region. This trend could give more investment opportunities to CKI, he said. As of June 30, CKI had cash of $1.43 billion and debt of $3.3 billion. Mr Li said recurring cash flow from core businesses had not been affected by the region's turmoil and exceeded $2.4 billion annually. CKI's mainland businesses were not hit by the flooding, he said. He confirmed the company was considering borrowing yuan for its mainland investments. Earnings per share in the half were 55 cents, up from 53 cents a year ago. Directors declared an interim dividend of 12 cents from 10 cents each. Revenue in the half rose 7 per cent from a year earlier to $1.71 billion. During the period, profit from CKI's infrastructure projects had year-on-year growth of 86 per cent. Hongkong Electric's core business showed steady annualised growth of 5.5 per cent in the first six months, and its materials division rose 5 per cent in the period. The company's cash injections into the mainland reached $9.8 billion by the end of June, and a further injection of $1 billion is planned. Prudential-Bache International analyst Billy Mok Kwan-pui said the result was better than many blue-chip companies in the present deteriorating environment. Credit Lyonnais Securities Asia analyst Anthony Wu Yat-wai said he was optimistic about the company's long-term outlook. He predicted that earnings growth would not exceed 15 per cent before 2000. Mr Wu said CKI would begin its investment drive in the mainland after 2000 and bolster the company's long-term earnings growth. 'For institutional funds which need to maintain their exposure in the Hong Kong market, CKI is the only choice in the infrastructure sector,' he said.