Wharf (Holdings) and China Merchants Holdings (International) have increased their stakes in Modern Terminals (MTL), a Wharf-controlled company which operates some of the SAR's busiest container terminals. In separate statements, the companies said they had each acquired their additional stakes from HSBC for an undisclosed amount. As a result HSBC's name will come off the MTL shareholder register having divested its last shares. Wharf said it increased its MTL shareholding to 55.3 per cent, from 50.8 per cent, while red-chip China Merchants said it added 1.8 per cent for a 22.1 per cent stake. According to an MTL official, HSBC owned slightly more than 6 per cent of MTL before yesterday's sales. Wharf, which has a stable of businesses in Hong Kong ranging from cable television to high-end retailing, accounts for MTL as a subsidiary in its financial statements. None of the parties involved in the transaction would divulge the transfer price of the shares. An HSBC official declined to comment on the deal, saying the company was in black-out mode as its annual financial reports were due out soon. However, China Merchants' investor relations manager, Tim She, said the deal was struck at a price-to-earnings ratio of less than 10 on MTL, but he would not reveal the price. 'This is cheaper than the present price-to-earnings ratio of China Merchants which is trading at around 13 to 14 times,' he said. In the past three decades, control of MTL, Hong Kong's oldest and second-largest container terminal operator has swung away from the European shipping line founders to a balance between Hong Kong investors and mainland interests. MTL operates Container Terminals 1, 2, 5 and 8 West in Kwai Chung, and reported throughput growth of 18.6 per cent last year to 3.07 million teu (20-foot equivalent units). Both Wharf and China Merchants, a mainland infrastructure to manufacturing conglomerate, have been steadily increasing their MTL holdings during the past several years. Lehman Brothers Asia investment analyst Philip Tulk said the deal seemed a good move for Wharf. 'It has been adding to its MTL stake for a long time. Wharf effectively runs and manages it, so why should it give so much of the profits away [to minority shareholders] after they put in all that work?' Mr Tulk said. HSBC had primarily been viewed as a financial investor, and at one point also had a large stake in Hongkong International Terminals (HIT), a Hutchison Whampoa subsidiary. 'For 2001, we are forecasting slower growth in container terminal throughput, but we are still expecting growth going forward,' Mr Tulk said. In November, 1997, China Merchants became the second-largest shareholder in MTL after paying parent China Merchants (Holdings) HK$2.68 billion for a 20.3 per cent holding. An analyst covering the red-chip sector said the deal was in line with China Merchant's corporate development strategy to concentrate on growing its ports' business. 'Since 1998 they have been acquiring stakes in ports and port-related businesses, and divesting toll-road ventures,' the analyst said. 'I think we can expect more acquisitions to come.'