Hutchison Whampoa Ltd., Hong Kong billionaire Li Ka-shing’s biggest company, rose to a six-year high after the Hong Kong Economic Times said the company may spin off its retail arm.
Hutchison Whampoa rose 3.3 percent to HK$95.95 in Hong Kong, the highest close since November 2007. The company may seek to raise as much as $10 billion in the spinoff of its health and beauty chain A.S. Watson Group, Hong Kong Economic Times reported today, citing unidentified people.
“If Hutchison spins off its Watson business, it may create exceptional income for Hutchison, boost its earnings and improve stock valuation,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. “Investors are expecting an earnings increase for Hutchison, that’s why the shares are rising today.”
Li has stepped up investments in Europe, buying telecom and utilities businesses, betting growth will outpace some of his Hong Kong assets. Asia’s richest man is planning to list his Hong Kong electricity business and is also studying the sale of his ParknShop supermarket chain in the former British colony.
“We do not comment on market speculation,” said Hutchison spokesman Jeremy Lau.
A.S. Watson posted sales of HK$148.6 billion ($19.2 billion) in 2012, with earnings before interest and taxation of HK$10 billion, according to its 2012 annual report. The business has more than 10,800 stores in 33 markets. Hutchison also operates ports, hotels and provides telecommunication services.
“If Hutchison spins off Watson, people who are interested in their retail business can invest directly,” said Sam.
Hutchison could list Watson on the city’s stock exchange main board within the next 12 to 18 months, the report said.