Li Ka-shing’s CK Infrastructure sees net income climb 3pc to HK$5.7 bn

Hong Kong tycoon’s Power Assets also plans special dividend of HK$7.5 per share

PUBLISHED : Thursday, 20 July, 2017, 8:48pm
UPDATED : Friday, 21 July, 2017, 3:37pm

Two of Li Ka-shing’s cornerstone businesses reported positive progress on Thursday, a week after speculation swirled in the markets that the doyen of Hong Kong business might be starting the process of handing over control of his empire to the family’s next generation.

CK Infrastructure (CKI), which has diversified infrastructure investments in energy , transportation, water related businesses worldwide such as in the United Kingdom, Australia, New Zealand, Canada, Hong Kong and mainland China, booked better-than-expected net profit for the six months ending June, as it continues ramping up large-scale deals.

While Power Assets, another Li-controlled multinational whose Hongkong Electric is the sole power supplier on Hong Kong and Lamma islands, announced a generous special interim dividend of HK$7.5 per share.

CKI’s net income climbed 3 per cent to HK$5.7 billion, which translates into HK$2.25 per share, outstripping consensus analyst estimates of HK$2.21 per share compiled by Bloomberg, while its turnover dipped 0.5 per cent to HK$14.0 billion.

Last week the billionaire, who turns 89 in July, insisted he “has no concrete timetable” to retire from his global conglomerate after a report in the Wall Street Journal suggesting he has told associates he plans to step down as chairman of his global conglomerate CK Hutchison Holdings by next year, with .

The WSJ added Li has already told his inner coterie of advisers, including son and deputy chairman Victor Li Tzar-kuoi, is earmarked as his successor.

On Thursday, 52-year-old Victor, who is CKI’s chairman, said: “Sizeable capital intensive deals are of particular interest to us. Our unique competitive edge lies in the readiness of our associate companies in the CK Group to form joint ventures in our investments,” he said of CKI, the first of his family’s key business vehicles to post half-year earnings.

Our unique competitive edge lies in the readiness of our associate companies in the CK Group to form joint ventures in our investments
Victor Li Tzar-kuoi

“This is most beneficial to us in the diversification and management of risk and reward, mitigating our exposure in any particular investment.”

In April, CKI – whose sprawling operations encompass gas networks in Britain and transportation projects in China – spearheaded a consortium to complete a US$5.6 billion acquisition bid for Australian power provider Duet Group, in what would be the Hong Kong tycoon’s largest overseas deal on record.

The elder Li, Asia’s third richest man, has also put his investment focus on Europe, where he has poured more than US$28 billion over the past five years, despite escalating geopolitical risks and a less cordial attitude toward foreign investment.

Li Ka-shing’s Power Assets and CKI to invest in his troubled Canada-based oil firm Husky

The weaker pound continued to weigh down CKI’s earnings from Britain in Hong Kong dollar terms, with profit from its British portfolio decreasing 8 per cent to HK$2.9 billion.

CKI is reportedly bidding for Redexis Gas in Spain for 1.75 billion (US$2.02 billion) and Q-Park, Europe’s biggest parking service provider, for over US$2.4 billion.

Daiwa Securities analyst Dennis Ip, said he expects the company to make more acquisitions in 2017, “given that the rising interest-rate environment could lead to more prudent bidding by CKI’s competitors”.

“CKI’s UK earnings exposure stands to fall from 72 per cent in 2015 to 62 per cent in 2018 with the recent non-UK acquisitions.”

An interim dividend of 67 HK cents per share was proposed, up from 63 HK cents a year earlier. CKI’s shares advanced 0.38 per cent to close at HK$65.8 ahead of the result announcement.

Over the last few years, the property-to-ports tycoon Li has diversified his business interests from Greater China, cashing out of mainland properties while adding assets elsewhere.

Duet says bid by Li Ka-Shing’s Cheung Kong Infrastructure approved by Australia

In Australia, for instance, his companies have stakes in Australian Gas Networks, Powercor Australia and other entities, whose profits gained 27 per cent in the first half to A$139 million (US$110 million), excluding the one-off gain last year from the disposal of Spark Infrastructure.

Separately on Thursday, Power Assets – in which CKI holds a 39 per cent stake – booked half-year earnings of HK$4.0 billion, up 16 per cent from a year earlier.

Last year, it earned 80 per cent of its profit from outside Hong Kong, mainly from the United Kingdom, Australia and mainland China.

Shares in Power Asset slipped 0.37 per cent to HK$68.2 on Thursday. It plans an interim dividend of 77 HK cents, against 70 HK cents for the same period last year.