Li Ka-Shing Says Europe Debt Crisis Won’t Halt Hutchison Growth
Li Ka-shing, Asia’s richest man, said Europe’s debt crisis won’t derail the growth prospects of his $68 billion empire, which includes U.K.’s biggest container port, utility assets and phone businesses in the region.
The 84-year old, who controls Hutchison Whampoa Ltd. (13) and Cheung Kong (Holdings) Ltd. (1), told reporters in Hong Kong yesterday that at least 95 percent of his businesses will grow annually over the next few years. He also said China’s economy will expand at least 7.5 percent this year.
Li made his forecasts after both his companies reported first-half profit yesterday that beat analyst estimates, boosted by earnings from U.K. utilities, Hong Kong office rents and retail stores in China. Nicknamed “superman” by the local media for his investing prowess, Li forecast in 2007 that China’s stock-market bubble would burst and in 2009 predicted the rally in Hong Kong home prices.
“He’s building this prediction on the assumption that the debt crisis in Europe won’t get much worse,” Ben Kwong, chief operating officer at KGI Asia Ltd., said in Hong Kong. “He never made it too plain, but at his best he’s been pretty good at forecasting the macro economy.”
Hutchison, Li’s biggest company, posted income of HK$10.2 billion ($1.3 billion), beating the HK$9.55 billion median of five analysts’ estimates in a Bloomberg News survey. Cheung Kong, Hong Kong’s second-biggest developer, said profit was HK$15.5 billion, compared with the HK$11 billion estimate.
Cheung Kong’s shares have risen 11 percent this year, the second least in the seven-member Hang Seng Property Index, which gained 13 percent. Hutchison has gained 5.5 percent this year, compared with the 6.8 percent increase in the benchmark Hang Seng Index.
Europe’s sovereign debt crisis, which prompted European Central Bank President Mario Draghi to promise action last week, is threatening to cripple Spain and Italy and tear the 17-nation euro area apart.
“We know what the situation in Europe is like,” Li said. “We can handle the environment now. I’ll say that even about retail. We are 100 percent sure that our infrastructure business will keep growing. We can say the same about the container ports.”
Hutchison, with investments in ports, telecommunications, utilities, retail, property and energy in more than 50 countries, yesterday said its mobile-phone service unit boosted profit before interest and tax by more than 51 percent from a year ago. The port business saw a 15 percent gain in pre-tax earnings, and said it will keep looking for expansion opportunities.
Hutchison is interested in acquiring a stake in Manchester Airports Group, Managing Director Canning Fok said on July 29. Manchester is one of Britain’s busiest airports outside of London. Phone unit 3 Austria is seeking European regulatory approval to acquire Orange Austria in a transaction valued at 1.3 billion euros ($1.6 billion).
“Many people thought that our figures would definitely be low for Europe,” said Li. “All our businesses in Europe did better this year than in last. This is very rare.”
In Hong Kong, Cheung Kong sold a total of 1,408 units for HK$12.5 billion in the first half, the second most among all builders in the city, according to figures compiled by Centaline Property Agency Ltd.
Earnings from property rentals for the landlord to Goldman Sachs Group Inc. and Barclays Plc in Hong Kong increased to HK$982 million from HK$919 million, Cheung Kong said yesterday.
Hong Kong home prices have risen 10 percent this year on low mortgage rates, even as property transactions slowed.
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 $30.6 billion.
Li, who’s 14th on the Bloomberg Billionaire Index with a net worth of $24.1 billion, last month transferred a one-third stake in a family trust that controls both Cheung Kong and Hutchison Whampoa from son Richard to elder brother Victor, as he seeks to consolidate succession planning.
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