Hong Kong property

CK Asset reports 20 per cent gain in core profit for first half of 2018 in strong showing for new chairman Victor Li

Victor Li is on a roll in his short tenure after father’s retirement, declaring core profit at conglomerate of US$1.54 billion

PUBLISHED : Thursday, 02 August, 2018, 5:54pm
UPDATED : Thursday, 02 August, 2018, 11:12pm

Victor Li Tzar-kuoi’s CK Asset Holdings announced a 20 per cent increase in core profit for the first half of the year, partly thanks to the world-record breaking sale of The Center in Central for HK$40.2 billion (US$5.15 billion).

The interim results, announced Thursday, were the first for Li since he took over as chairman of CK Asset in May upon the retirement of his dad, Li Ka-shing, Hong Kong’s richest man.

The underlying profit, excluding investment property revaluation and property disposal, amounted to HK$12.07 billion (US$1.54 billion), or HK$3.26 earnings per share. That soundly beat expectations of two brokerage houses.

Goldman Sachs expected CK Asset’s underlying profit would fall 13 per cent to HK$7.9 billion for the six months to June 30, compared to HK$9.1 billion in the same period last year, while Morgan Stanley predicted a 3.3 per cent decline in core earnings to HK$8.8 billion.

CK Asset said revenue rose to HK$24.12 billion for the six months to June 30.

Net profit rose 65 per cent to HK$24.75 billion due to the disposal of investment properties as well as revaluation gains. An interim dividend of 47 HK cents per share was declared, 12 per cent higher than 42 HK cents in the same period in 2017.

CK Asset has been expanding beyond property partly because of growing uncertainty about the Hong Kong property market, moving this past year into aircraft leasing, energy and infrastructure assets to provide more stable income.

“While the property operations recorded performance in line with expectations, the newly acquired businesses have started to contribute stable recurring income to the group,” Chairman Victor Li said in the company’s statement filed to the Hong Kong stock exchange. “Also, substantial gains were recognised on disposal of the group’s ownerships in Century Link in Shanghai and The Center in Hong Kong.”

CK Asset said it gained HK$11.6 billion from The Center’s sale, which was completed in May, and nearly HK$7 billion from selling its interest in Century Link in January.

Victor Li to push ahead with Hutchison House redevelopment into 41-storey office tower starting next year

Thursday’s results were the latest report card for Li. On Monday, CK Asset announced plans to redevelop the 23-storey Hutchison House in Central into a 41-storey office tower, reflecting the conglomerate’s aim to create extra value amid soaring land prices in the city’s premier business district. Also, on July 26, Cheung Kong Infrastructure, another part of the Li empire chaired by Victor Li, reported a rise in profit for the first half of the year.

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

Analysts who attended a briefing after the results were released quoted Victor Li as saying he has no plans to sell Hutchison House once it is redeveloped. They also reported that Li said it is a good time to buy properties overseas because there are many investment opportunities, although he didn’t add details.

Goldman Sachs had expected CK Asset’s move into aircraft leasing, energy and infrastructure assets would have a pre-tax profit of up to HK$2.8 billion – which was in line with Thursday’s announced results – helping to offset its expectation of a decline in profit from property sales.

CK Asset said revenue from property sales dropped 58 per cent from a year earlier.

Shares in the company closed 2.6 per cent lower at HK$58.50 yesterday, its lowest since June last year.