Li Ka-shing

Shares of tycoon Li Ka-shing’s companies slip as Hong Kong’s ‘Superman’ hangs up his cape

Analysts says however that the reaction was muted overall, given that the company has long had a clear succession plan and continuity is expected

PUBLISHED : Monday, 19 March, 2018, 7:07pm
UPDATED : Tuesday, 03 July, 2018, 8:57pm

Shares in Hong Kong tycoon Li Ka-shing’s two listed flagship companies fell on Monday after the city’s richest man announced his retirement from his position as chairman, but analysts saw the overall reaction as muted as they expected continuity in leadership.

Conglomerate CK Hutchison Holdings fell 1.87 per cent, or HK$1.85, to HK$97.05 while property developer CK Asset Holdings, closed down 0.57 per cent at HK$69.60, after falling as much as 3.5 per cent in morning trade. Shares of the group’s other listed units also fell, with CK Infrastructure down 1.49 per cent to HK$65.90 and Power Assets Holdings losing 2.04 per cent to HK$69.75.

On Friday, Li, nicknamed “Superman” in Hong Kong for his investing prowess, announced his retirement from his position as chairman of the two companies with effect from the end of the 2018 annual general meeting on May 8, handing over the reins to his elder son Victor Li Tzar-kuoi. He will continue to serve as a senior adviser to the companies.

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“We believe the impact would be minimal given the succession process has been in train for some time, since Victor Li took charge as deputy chairman of CK Group in 1994,” said Joyce Kwock, property analyst at Nomura, in a research report.

The report noted that Victor Li, who has more than 30 years’ experience with the group, was chairman of the executive committee, formed in March 2013 with 14 other members to oversee the underlying businesses on a day-to-day basis.

“The succession plan has been in place for five years already,” she said.

Nomura expects CK Asset to continue to perform well due to high margins of over 37 per cent in property sales in Hong Kong and China. Recurring profit contribution will grow 21 per cent year on year to HK$14.5 billion, thanks to its infrastructure investments.

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Others noted the impact on investor sentiment of Li’s retirement.

“There are still some investors who believe in the influence of the elder Li. That made the shares drop,” said Alfred Lau, property analyst at Bocom international. “But in our view, the impact is minimal as there is no change in the management team.”

Bocom sees a positive outlook in 2018 for CK Hutchison, citing its Husky Oil and telecoms units as well as gains from its infrastructure projects globally.

CK Asset posted an underlying profit – excluding a revaluation gain on investment properties – of HK$20.32 billion (US$2.59 billion) for the year to December.

It would appear even Hong Kong’s “Superman” met his kryptonite. CK Hutchison reported a hedging loss of HK$1.2 billion on its forward contracts against risks in the British pound, euro and yuan, even as the company’s 2017 net profit beat estimates and rose 6 per cent to HK$35.1 billion. The loss was offset by gains from converting foreign-currency earnings into a weaker Hong Kong dollar.