CK Hutchison’s Profit Rises as Global Assets Fend Off Covid Woes

Shirley Zhao and Shawna Kwan, Bloomberg News

The CK Asset Holdings Ltd. logo at the Cheung Kong Center II construction site in Hong Kong, China, on Monday, March 13, 2023. CK Asset is scheduled to release earnings results on March 16. Photographer: Paul Yeung/Bloomberg , Bloomberg

(Bloomberg) -- CK Hutchison Holdings Ltd.’s profit rose about 10% in 2022, topping analyst estimates, as a diversified global portfolio and major deals helped the conglomerate founded by billionaire Li Ka-shing weather headwinds including China’s Covid lockdowns, a downturn in Europe and currency fluctuations.

The flagship company of Li’s CK Group, now led by his eldest son Victor Li, reported net income of HK$36.68 billion ($4.67 billion) for the 12 months through December, it said in a statement Thursday. Total revenue climbed 2.7% to HK$457 billion. The company announced a full-year dividend of HK$2.9 per share, a 10% increase from the year before.

CK Group’s real estate arm, CK Asset Holdings Ltd., reported HK$21.7 billion in net income in the period, compared to HK$21.2 billion in the year before, according to a separate filing Thursday.

Key Insights

The profit growth is mainly attributed to CK Hutchison’s investment in Canada-based Cenovus Energy Inc. and the completion of several key deals, Chairman Victor Li said in the statement.
CK Hutchison was buffeted on multiple fronts last year, with China’s Covid Zero restrictions battering its retail arm and rising inflation in the US and Europe dragging on its ports business. Intense competition hurt profitability at its telecommunications units, while a weaker euro and British pound against the dollar-pegged Hong Kong currency also hurt earnings.
Still, the group’s expansive portfolio helped offset risks in China and the infrastructure and utilities units have been generating stable income. CK Hutchison earns more than half of its revenue from Europe and gets about 20% from China.
The group has also been selling assets. In November, CK Hutchison completed the sale of its European telecom towers to Cellnex Telecom SA for 10 billion euros ($10.6 billion). It’s Italian wireless carrier Wind Tre SpA is weighing a spin off of its remaining network infrastructure, people familiar with the matter said earlier this year.
CK Hutchison and Vodafone Group Plc are finalizing “whatever necessary” to bring talks on a potential merger of their UK mobile businesses to a conclusion, said CK Hutchison co-managing director Canning Fok. The group hopes talks will end soon.
Like other Hong Kong real estate developers, CK Asset endured a difficult year in its home market due to the city’s strict Covid policies and climbing interest rates. This year looks brighter with China’s shift to living with the virus likely to see a pick up in demand, with prices in Hong Kong’s residential market up 5% this year.
Hong Kong’s commercial sector remains weak, though. The city recorded an all-time high of 13 million square feet of empty premium office space in February, according to CBRE Group Inc. CK Asset’s new tower, scheduled to be available this year, hasn’t announced any committed leases.
CK Hutchison unit CK Infrastructure Holdings Ltd. reported net income rose 3.1% to HK$7.75 billion for 2022. Its utilities arm Power Assets Holdings Ltd. saw profit fall 8% to HK$5.65 billion.

Market Performance

CK Hutchison’s stock rose 2.2% this year, compared with a 2.9% drop in the benchmark Hang Seng Index. CK Asset advanced 1.6% this year. The companies announced their earnings after the market close.