Thursday, April 15, 2021
 
Columnist
Martin Hennecke
 
CHEUNG KONG
HKEx Stock Code : 00001 
 
Corporate Profile
The principal activities of the Company are investment holding and project management. Its subsidiaries are active in the field of property development and investment, hotel and serviced suite operation, property and project management and investment in securities.

Business Review - For the year ended December 31, 2012

2012 was a challenging year for global markets. While economic sentiment has moderately improved in view of the stabilising U.S. economic situation, Eurozone uncertainties have continued to persist.

Despite an uncertain global economic landscape, our core operations performed well and delivered solid results. For the year ended 31st December, 2012, the Group's profit before share of results of the Hutchison Whampoa Group was HK$19,098 million, an increase of 6% over the previous year. The Group's share of results of the Hutchison Whampoa Group decreased in 2012. This comparative decline against the previous year was primarily attributable to the significant one-off gain included in the 2011 annual results arising from the disposal of part of the Hutchison Whampoa Group's interests in its port businesses. Excluding this significant one-off gain in 2011, the 2012 annual results of the Group would show an increase of 12% as compared to the previous year.

In 2012, less profit contribution was recorded from the Group's property sales as a result of the timing of the completion of developments with relatively more developments completed during 2011. Contributions from property rental and hotels and serviced suites increased solidly over 2011, and the growth in contribution from the recently invested infrastructure business was in line with expectations.

Our property business performed well despite the reduced number of developments completed in Hong Kong in 2012. Strong contributions from Singapore and the Mainland have mitigated the impact of less profit contribution from property sales in Hong Kong. Various operating and marketing goals were met, and our landbank was further strengthened. Looking into 2013, the rise in building costs will continue, at a rate likely to reach double digits. This, coupled with solid end-user demand, low interest rates and a favourable employment environment, will continue to lend support to a stable property market in Hong Kong. However, overall market conditions will continue to be impacted by external economic factors and the formulation of local housing policies.

The contribution from the Group's property business on the Mainland increased favourably over 2011. Our property projects are maturing steadily, and marketing activities are proceeding as planned. The Central Government's tightening measures will continue to steer the development of the Mainland's property market. However, we remain focused on driving long-term sustainable growth on the Mainland. Our various projects will proceed as scheduled and in response to market developments.

The Group's overseas property business performed solidly in 2012. We will continue to position ourselves for suitable overseas investment opportunities to further strengthen our foundations for growth.

In addition to healthy organic growth of existing operations, the Group also benefited from the profit contribution generated from its infrastructure investments. The Group's participation in the acquisitions of Northumbrian Water Group Limited and Wales & West Utilities Limited in the United Kingdom, which were completed in October 2011 and October 2012 respectively, represented its first foray into the infrastructure sector and attractive returns are expected as a result of this diversification strategy.

We are steadfast in maintaining financial prudence and soundness. Corporate finance initiatives were taken to further strengthen the capital base of the Group. US$500 million Floating Rate Notes under the Euro Medium Term Note Programme were issued in June 2012, and HK$1,000 million Guaranteed Senior Perpetual Securities (¡§GSPS¡¨) and US$500 million GSPS were issued in July 2012 and January 2013 respectively.

Listed Affiliated Companies

The Group continued to benefit from the global opportunities arising from its strategic investments in listed affiliated companies, particularly through the Hutchison Whampoa Group's diversified portfolio of global businesses. In 2012, businesses in markets beyond Hong Kong continued to perform well and generate satisfactory results to the Group and its listed affiliated companies.

The Hutchison Whampoa Group

The overall performances of the Hutchison Whampoa Group before one time items, including the gain generated from the initial public offer of units in Hutchison Port Holdings Trust in 2011, continued to be resilient during the year under review. All major operating divisions, other than its telecommunications joint venture in Australia, continued to perform well around the globe, including Europe, and reported improved recurring results. Looking into 2013, we expect the Hutchison Whampoa Group's various businesses to be challenged by the weak economic conditions and continued uncertainties in a number of markets in which they operate, but barring unforeseen material adverse circumstances, the Hutchison Whampoa Group is poised for another year of solid progress and good results.

CKI

Cheung Kong Infrastructure Holdings Limited (¡§CKI¡¨) has achieved another strong performance in 2012. Over the past few years, CKI has stepped up the pace of its acquisition strategy and benefited from the opportunities presented in the uncertain global economic environment. Its earnings base has been expanded and profitability enhanced. Good organic growth has also been achieved. At the same time, prudent corporate finance initiatives have been undertaken to strengthen its balance sheet. Though the economic climate going into 2013 remains uncertain, CKI is well-positioned to weather such conditions and to capitalise on any opportunities which may arise.

Power Assets

2012 has been a year of continued success for Power Assets Holdings Limited (¡§Power Assets¡¨), with earnings from operations outside Hong Kong having increased significantly, again surpassing those from Hong Kong. Power Assets' long-term strategy of seeking steady earnings growth via carefully selected global investments has proven its worth. Power Assets will continue with this strategy as it continues to expand at a measured pace.

CK Life Sciences

CK Life Sciences Int'l., (Holdings) Inc (¡§CK Life Sciences¡¨) achieved a strong performance in 2012. Through the acquisitions of Peaty Trading Group, three vineyards and Cheetham Salt Limited in Australia, the scope of CK Life Sciences' investment portfolio has been strengthened, and the profitability of its agriculture-related business enhanced. Meanwhile, organic growth of CK Life Sciences' existing businesses is also poised to continue to contribute to its revenue stream, while its R&D initiatives continue to make good progress. We are confident about the future prospects of CK Life Sciences.

Business Outlook - For the year ended December 31, 2012

As compared to last year, global market conditions will likely turn more stable in 2013. However, many challenges and uncertainties will continue. While some improvement has been seen in the U.S. economic outlook, the global economic outlook remains fragile as the uncertainties in the Eurozone economies continue to weigh on the pace of global recovery.

China continued to experience strong economic growth. For 2012 as a whole, real GDP growth was 7.8%, moderately above the growth target of 7.5%. In 2013, China's growth momentum is expected to continue as the Central Government has reaffirmed a proactive fiscal and prudent monetary policy with particular emphasis on quality and efficient economic growth, long-term sustainability, and urbanisation. Hong Kong is expected to stay on track to achieve modest economic growth this year, leveraging the strength of its healthy economic fundamentals as well as China's sustainable development. We remain optimistic about the long-term economic prospects for the Mainland and Hong Kong.

The global geopolitical and economic landscape is ever changing and there will be many challenges ahead. The Cheung Kong Group has been presented with numerous investment opportunities and options, and continues to maintain a low debt ratio. We will continue with our strategy of ¡§Growth with Stability¡¨. The Group will vigilantly strengthen its core business and operations with a view to undertaking steady progress in a constantly challenging market. We will be agile in seizing investment opportunities for long-term growth. We will also achieve new growth through the continued pursuit of quality investments both in Hong Kong and abroad to create further value for shareholders. The Cheung Kong Group is poised for a solid performance in 2013. We are strongly confident in the Cheung Kong Group's business prospects.

Source: Cheung Kong (Hldgs) (00001) Annual Results Announcement
Chairman LI Ka-shing Issued Capital (shares) 2,316M
Par Value HKD 0.5 Market Capitalisation (HKD) 265,201M
 
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