Li Ka-shing

Hong Kong company reporting season

Hong Kong home prices, driver of CK Property’s earnings, to remain buoyant, Li Ka-shing says

Li’s two main holding companies both reported stronger earnings, in their first set of full-year results after the tycoon’s corporate reorganisation, prompting him to raise final dividend payouts

PUBLISHED : Wednesday, 22 March, 2017, 9:27pm
UPDATED : Tuesday, 03 July, 2018, 9:01pm

Residential property prices in Hong Kong, already the world’s costliest urban centre to live in, will remain buoyant over the next two years because the supply of land and new homes cannot keep up with demand, said Li Ka-shing, the city’s wealthiest man and chairman of one of its biggest builders of apartments and luxury homes.

Record property prices propelled the underlying profit of Li’s Cheung Kong Property Holdings up by 16 per cent to HK$18.03 billion (US$2.32 billion) last year, spurring the company to raise its year-end final dividend by 9.5 per cent to HK$1.15 per share.

“Home prices will not fall over the next two years as there is strong buying demand,” Li said during a Hong Kong press conference after announcing the 2016 results of his two holding companies.

CK Property and CK Hutchison Holdings, Li’s main holding companies, both reported stronger 2016 profits on Wednesday, delivering to shareholders a solid set of full-year results after the tycoon reorganised his corporate empire.

CK Property’s 2016 revenue jumped 19 per cent to HK$69.9 billion, beating analysts’ estimates in a Bloomberg survey.

“The result is better than expected,” Prudential Brokerage’s associate director Alvin Cheung Chi-wai said. “Homebuying interest will not be affected in the near future by the imminent interest rate increase.”

Like other developers and land owners in the city, CK Property has been outbid in the past year by mainland Chinese companies flushed with capital, which have snapped up land parcels and assets around the city for development, often at prices 50 per cent above market valuation.

“The market is concerned about CK Property’s land bank in Hong Kong in the face of strong competition from mainland developers,” Cheung said.

At Hutchison – owner of all the non-property businesses of Li’s worldwide holdings, spanning telecommunications, power plants, container ports, supermarkets and retail outlets – profit rose 6 per cent to HK$33 billion last year. The company raised its final dividend by 5 per cent to HK$1.945 per share.

In his press conference, Li said there was a global recovery in retail spending even though Hong Kong’s malls and shops remained in the doldrums.

“Globally, the retail market picked up last year and our business performed well, but Hong Kong was the worst performer,” he said.

Hutchison operates mobile-phone networks in Australia, Denmark, Italy, Ireland, Sweden and Britain.

The decision by Britain to withdraw from the European Union would not deter the company from future mergers and acquisitions in Europe, the group’s co-managing director Canning Fok Kin-ning said.

“If there’s a good opportunity, why not?” he said, adding that the firm’s merger and acquisition moves had always been prudent.

CK Property’s shares fell 1 per cent to HK$53 before earnings were announced, while Hutchison dipped 0.5 per cent to HK$96.45.

Li, who turns 89 in July, appears to be in robust health, walking unassisted into his 90-minute press conference.

“I have been admitted to hospital before,” he said. “I can say that I have attended a lot of meetings recently, including seeing my doctor.”

Li’s businesses touch almost every aspect of Hong Kong life, from the apartments people live in to electricity supply and mobile phones, to retail and the internet. He reorganised his corporate empire into two holdings, part of his succession planning involving Victor Li Tzar-Kuoi, the elder of his two sons who is also deputy chairman of both holding companies.

“I can pass the management of the company to Victor and my management team at any time,” he said. “Absolutely no problem at all.”