Cheung Kong’s 2010 Profit Rises 35% on Contribution From Hutchison Whampoa
Cheung Kong (Holdings) Ltd. Chairman Li Ka-shing
Dale de la Rey/Bloomberg
Cheung Kong (Holdings) Ltd. Chairman Li Ka-shing.
Cheung Kong (Holdings) Ltd. Chairman Li Ka-shing. Photographer: Dale de la Rey/Bloomberg
Cheung Kong (Holdings) Ltd., the developer controlled by Hong Kong’s richest man, Li Ka-shing, said 2010 net income climbed 35 percent after the contribution from its unit Hutchison Whampoa Ltd. (13) rose and it booked profits from property sales.
Net income increased to HK$26.5 billion ($3.4 billion), or HK$11.43 a share, from a restated HK$19.6 billion, or HK$8.47 a share, a year earlier, the world’s second-biggest builder by market value said in a statement today. That beat the average HK$20.2 billion estimate of 12 analysts compiled by Bloomberg.
Li, nicknamed “superman” by the local media for his investing prowess, is seeking growth from Hutchison’s industries ranging from utilities and mobile phone networks to oil in 52 countries after Hong Kong stepped up property measures in November to ease speculation in a city where housing prices have risen more than 65 percent since the start of 2009. Cheung Kong last year also made HK$2.2 billion from the sale of a stake in a Singapore downtown property, it said in today’s statement.
“Excluding the one-off item to the Singapore REIT, the net income figure is actually lower than my expectation,” said Adrian Ngan, a Hong Kong-based analyst at MF Global Holdings Ltd. “Other than that, there is actually no surprise in Cheung Kong’s earnings performance. Their profit from apartment sales is lower than expected.”
Excluding earnings from its 49.97 percent stake in Hutchison Whampoa, profit advanced 29 percent to HK$16.5 billion from HK$12.8 billion a year earlier, the company said.
Hutchison
Hutchison Whampoa, Li’s biggest company, said full-year profit rose 47 percent, after boosting sales from mobile-phone services, ports, and cosmetics in Europe, the Americas and China.
“Among developers we prefer Cheung Kong because Hutchison’s contribution can help it cushion the impact from the property market,” said David Ng, a Hong Kong-based analyst at Royal Bank of Scotland Plc. “It’s taking a longer time these days for developers to sell their new units.”
Net income climbed to HK$20 billion, or HK$4.70 a share, from a restated HK$13.6 billion, or HK$3.20, a year earlier, Hong Kong-based Hutchison Whampoa said in a statement today. This exceeded the HK$16.4 billion average of nine analysts’ estimates compiled by Bloomberg.
Shares Rise
Cheung Kong’s shares rose 0.5 percent to HK$122.50 at the 4 p.m. market close in Hong Kong, before earnings were announced. The stock has risen 2.2 percent this year and is the second-best performer in the seven-member Hang Seng Property Index, which has fallen 3.1 percent. It’s the world’s largest developer after Sun Hung Kai Properties Ltd., also based in Hong Kong.
Hutchison fell 2.1 percent to HK$88.80.
Cheung Kong, which completed and booked profit from projects including Festival City Phase I in 2010, said earnings from property sales rose to HK$5.6 billion from HK$5.5 billion a year earlier. Rental profit from properties including the Center was little changed at HK$1.1 billion.
Profits from hotel and serviced suites rose to HK$617 million from HK$360 million, the company said.
Cheung Kong will pay a final dividend of HK$2.45, compared with HK$2.20 a year earlier.
Li, who opened a plastic flower factory after World War II, began investing in Hong Kong real estate in 1967 after riots from China’s Cultural Revolution depressed prices to build Cheung Kong into a company with a market value of $36 billion.
Inflation Rising
Hong Kong’s government in November announced it would impose additional stamp duties on home transactions and increase land supply, its toughest price curbs to date. The number of home transactions declined year-on-year in January and February in Hong Kong.
While the government measures will affect the property market in Hong Kong, it will remain “healthy, barring unforeseen adverse changes,” Li said.
“Homebuyers will be okay if they’re buying homes for self- use as inflation is getting more serious,” Li told reporters at a briefing in Hong Kong today. Loose monetary policy in the U.S. “is good for their economy but is causing problems in other countries.”
The Hong Kong Monetary Authority expects continued “upward pressure” on home prices in the city and inflationary pressure will increase, the city’s de facto central bank said in its half-yearly report today. The chances of interest rates rising in the U.S. are strengthening and the outlook for global growth is “uncertain,” said the central bank, which is unable to conduct an independent monetary policy because of the Hong Kong dollar’s peg to the U.S. dollar.
Mortgage Loans Fall
Hong Kong’s newly drawn down mortgage loans fell to the lowest level in a year in February, the HKMA said on March 25.
The government measures probably affected sales of Cheung Kong’s Festival City Phase II, a project in Hong Kong Tai Wai district, which began a day after the government’s November announcement, Bank of America Corp.’s Merrill Lynch & Co. unit analysts led by Karl Choi wrote in a Feb. 8 report.
The Hong Kong government is seeking a “healthy” property market, Victor Li, Li’s son and deputy chairman of Cheung Kong, said at the briefing today.
Li, who arrived in Hong Kong as a refugee from China in 1940, is ranked the city’s richest man by Forbes magazine this month after his net worth increased $5 billion to $26 billion, and the world’s 11th richest.
Li forecast in 2007 that China’s stock-market bubble would burst and in 2009 predicted the rally in Hong Kong home prices. The Shanghai Composite Index lost 65 percent in 2008, the most among the world’s 10 biggest stock markets.
To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
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