Hutchison Whampoa Shares Climb on ‘Resilient’ Europe Assets

Hutchison Whampoa Ltd. Chairman Li Ka-shing
Li Ka-shing, chairman of Hutchison Whampoa Ltd. and Cheung Kong Holdings Ltd. Photographer: Jerome Favre/Bloomberg

Hutchison Whampoa Ltd. rose the most in almost three years in Hong Kong trading after the company, billionaire Li Ka-shing’s biggest unit, said its operations in Europe are weathering the region’s financial crisis.

The shares climbed 11 percent, the most since October 2008, to HK$63.15 at the 4 p.m. local time close, making the stock the best performer in Hong Kong’s benchmark Hang Seng Index. Before today, the stock had declined 29 percent this year, underperforming the Hang Seng.

The Hong Kong company -- with investments in industries spanning telecommunications, retail and utilities in more than 50 countries -- said yesterday its operations in Europe are “very resilient.” Global stocks and commodities markets plunged last quarter amid concerns that European financial companies will have to write down their holdings of Greek, Italian, Spanish and Portuguese government bonds.

“We believe Hutch’s share price has been over-penalized due to its exposure to Europe,” Credit Suisse Group AG analyst Cusson Leung wrote in a report today. “The risk of its European operations being dragged down by the economy is quite limited except for port operations.” Leung lowered his price estimate for the stock to HK$103.50 from HK$111.80, and kept his “outperform” recommendation.

Hutchison shares are rated the equivalent of “buy” by 13 out of 15 analysts tracked by Bloomberg. Only one analyst has a sell recommendation on the stock, according to Bloomberg data.

Net Asset Value

Europe accounted for 25 percent of Hutchison’s earnings before interest, tax, depreciation and amortization in the first half, the company said in a filing to the Hong Kong stock exchange yesterday. Hutchison has a net asset value of HK$119 a share, according to the filing, which cited an average of estimates from brokerages including Bank of America Corp. and Morgan Stanley.

Cheung Kong Infrastructure Holdings Ltd., controlled by Hutchison, said in August it offered 2.4 billion pounds ($3.7 billion) to buy Northumbrian Water Group Plc in the U.K. Europe accounts for 45 percent of the company’s assets, according to Hutchison, which also owns mobile-phone businesses operating under the ‘3’ brand in the U.K. and Italy, in addition to European retailers Superdrug and Marionnaud.

Li is Hong Kong’s richest man, and the world’s 11th wealthiest individual with a net worth of $26 billion, Forbes magazine estimated in March.

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