Li Ka-shing’s companies report lower earnings, won’t bet against Hong Kong’s prospects

Billionaire Li Ka-shing family’s flagship companies, with interests in infrastructure, property, supermarkets and utilities worldwide, reported weaker performance amid heightened geopolitical and trade tensions. The group said it will not bet against Hong Kong’s power to recover.

Earnings at CK Hutchison, the conglomerate with businesses spanning ports, telecommunications and retailing, fell 7 per cent to HK$10.2 billion (US$1.31 billion) in the first half from a year earlier, according to a Hong Kong stock exchange filing on Thursday. Revenue increased by 4 per cent to HK$232.6 billion.

Despite the hiccups and a greater focus on overseas assets, the group is not going to bet against the future prospects of Hong Kong and mainland China, said Victor Li Tzar-kuoi, chairman of both companies and the billionaire’s eldest son.

“My experience tells me that when the Hong Kong market turns around, it can turn around very rapidly,” he told analysts at the post-earnings call. “History has shown that when this happens, there is not much time for reaction. I am not going to bet against Hong Kong’s ability to recover. Everyone who has done that in the past has been proven wrong.”

The younger Li effectively controls about 47.8 per cent of CK Asset and 30.4 per cent of CK Hutchison through direct equity stakes and offshore family trusts, according to their annual reports.

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How Li Ka-shing became Hong Kong’s richest man

How Li Ka-shing became Hong Kong’s richest man

The world economic outlook remains challenging due to ongoing geopolitical tensions and trade conflicts, he said. The global business environment will be shaped by the changing economic and political landscape as growth momentum and monetary policies diverge, he added.

CK Hutchison retreated 1.1 per cent to HK$40.85 on Thursday, while CK Asset gained 0.6 per cent to HK$31.60.

CK Asset said residential property transactions in Hong Kong peaked in April after the government scrapped all market curbs in February to help stem a multi-month slide in prices. However, high interest rates have continued to undermine the market sentiment, it added.

The company said property sales declined by 44 per cent to HK$4.63 billion from a year earlier, with revenue coming mainly from the Lyos project in Hung Shui Kiu, the first phase of Grand Jeté project in Tuen Mun, and various completed projects in mainland China.

“The economic environment and property market sentiment remained weak in Hong Kong and on the mainland,” CK Asset said in the filing. “By adopting a proactive sales strategy and launching residential projects at opportune times, the group was able to record an increase in contracted sales during the period.”

Both companies have proposed to cut interim dividends. CK Hutchison will give out HK$0.68 per share versus HK$0.756 in the first half of last year, while shareholders at CK Asset will get HK$0.39 per share versus HK$0.43 previously.