Tuesday, July 23, 2019
Martin Hennecke

CKH hiding $57b debt, says short seller
<p>Short seller GMT research said CK Hutchison Holdings (0001) may be concealing HK$57.7 billion of debt associated with assets held-for-sale.</p><p>The Hong Kong-based short seller also pointed out in the report that CKH&#39;s profit in 2018 surged 38 percent to HK$13.2 billion due to accounting adjustments from the acquisition of Italian telecom operator Wind Tre, plus the residual impact of its reorganization in 2015.These non-cash adjustments explained why CKH&#39;s operating cash flows lagged cash profit, and why the company&#39;s capital expenditure consistently exceeded its depreciation and amortization, said GMT.</p><p>The short seller criticized that this aggressive accounting was being used to give CKH a higher market rating and access to cheaper credit.</p><p>CKH has recognized a nominal net gain of around HK$193 million from non-cash accounting movements in its 2018 annual report. S&amp;P Global Ratings has also raised CKH&#39;s rating by one notch to single-A during last year. The company has not yet responded to the short sell report.</p><p>Meanwhile, CK Asset (1113) is considering selling its Shanghai project - Upper West Shanghai - and may cash in almost 12 billion yuan (HK$13.7 billion), said Bloomberg. The sale of the entire project could be valued at about 20 billion yuan. CK Asset has a 60 percent interest.</p>

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