Li Ka-shing

Hong Kong tycoon Victor Li off to solid start as new boss as CKI reports rise in first-half profit

The rise was due mainly to acquisitions in Australia and Germany, as well as to strong business in the UK

PUBLISHED : Thursday, 26 July, 2018, 6:39pm
UPDATED : Thursday, 26 July, 2018, 11:02pm

Hong Kong conglomerate Cheung Kong Infrastructure (CKI) reported a rise in first-half profit thanks largely to overseas business acquisitions, handing new chairman Victor Li Tzar-kuoi a solid start after he took the reins in May of the business empire founded by his father Li Ka-shing.

Net profit for the first six months was HK$5.94 billion (US$756.9 million), up 5 per cent from HK$5.66 billion in the same period last year, and amounted to 51.8 per cent of the HK$11.47 billion average full-year profit estimate by seven analysts polled by Bloomberg.

Revenue grew 39.2 per cent year on year to HK$19.45 billion, Victor Li said in a filing to Hong Kong’s stock exchange on Thursday. The board declared an interim dividend of 68 HK cents per share, up from 67 cents last year.

“If not for a few one-off items which occurred in [the] UK and Australia in the first half of 2017, the 2018 interim profit contribution of our underlying businesses would have posted a double digit [percentage] increase over the same period last year,” he said.

“A pipeline of potential acquisitions is currently being explored including a large-scale project in Australia,” he said of CKI’s business outlook.

Victor Li became chairman of CK Hutchison Holdings and CK Asset – the two flagship companies making up the busines empire – after his father stepped down at the age of 89. The elder Li had built up the business from nothing, and is Hong Kong’s richest man. CKI is 75.7 per cent-owned by CK Hutchison Holdings.

Britain continued to be the CKI’s biggest source of net profit, contributing HK$2.93 billion – 0.3 per cent higher year on year – or 45.9 per cent of the total.

Profit from Australia jumped 37.4 per cent to HK$1.1 billion, mainly due to a greater contribution from gas and power distributor Duet, which had been acquired in the first half of last year. Profit from continental Europe grew threefold to HK$588 million after the purchase 12 months ago of German buildings energy measurement and management solutions provider Ista.

CKI engages in gas and power distribution, power generation, water supply and sewage treatment in Britain, gas and power distribution and transmission in Australia, waste management and power distribution in New Zealand, waste-to-energy projects in Holland, power generation in Canada, and toll roads and bridges in mainland China.

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Meanwhile, Power Assets, 38 per cent-owned by CKI, reported a 2.4 per cent year on year rise in net profit to HK$4.12 billion, amounting to 51.8 per cent of the analysts’ average full-year profit estimate of HK$7.95 billion.

An interim dividend of 77 HK cents was declared, the same as last year. Last year’s special interim dividend of HK$7.5 a share was not repeated.

It had HK$7 billion of cash at the end of June, down from HK$41.9 billion 12 months earlier and HK$61.7 billion 24 months earlier.

It had previously declared multiple special dividends to distribute most of the HK$52.6 billion it reaped from a sale of half of its stake in power utility Hong Kong Electric in early 2014.

The company has energy projects in Hong Kong, mainland China, Europe, Canada, Australia, and New Zealand. Britain contributed 53.5 per cent of its profit.

Last month, CK Asset Holdings, CKI and Power Assets Holdings made a joint offer to buy all the shares of Australian gas pipeline company APA Group for A$13 billion (US$9.7 billion).