Li Ka-shing’s flagship listed company, CK Hutchison, has reported a decline in its mid-term performance. The company’s first-half profit fell by 41% year-on-year to HK$11.2 billion. This decrease in profit has prompted CK Hutchison to declare an interim dividend of HK$0.756 per share, a 10% decrease compared to the previous year.
Additionally, CK Hutchison’s property sales revenue for the first half of the year dropped by 56.2% to HK$3.53 billion. The company attributed this decline to its cautious approach towards land purchases. However, Chairman Li Zeju reassured that despite the decrease in property sales revenue, the company’s financial situation remains stable.
Speaking at a performance conference, Li Zeju encouraged Hong Kong citizens to take advantage of the current property market conditions, stating that it is a better time to buy property now compared to three years ago. He expressed confidence in the long-term demand and purchasing power of the property market, despite the challenges it currently faces.
CK Hutchison’s overall performance has been impacted by high inflation, resulting in a time-lagged increase in costs and income. Li Zeju mentioned that there were no significant acquisitions in the first half of the year, and the company focused on the natural growth of its existing businesses. However, CK Hutchison recorded non-recurring income of HK$10 billion in 2022 due to the sale of assets. The company may not see realizable income this year but will continue to seek long-term goals with value-added potential for shareholders.
In response to the uncertain global economy, CK Hutchison prioritized preserving cash in the past period and refrained from conducting any share repurchases. However, Li Zeju indicated that the company may consider repurchases in the rest of the year depending on market conditions.
The company’s port and telecommunications divisions have faced significant pressure, with a 7% year-on-year decline in port throughput in the first half of the year. Li Zeju attributed the decrease to the slow recovery of China’s industrial production and the digestion of high inventories in Europe and the United States. However, he anticipates throughput to resume growth in the fourth quarter as the situation improves.
In the telecommunications business, the European 3 Group experienced a modest increase in customers and revenue in the first half of the year. However, profitability was impacted by increased service fees, energy costs, and rising inflation. CK Hutchison expects profitability in the telecommunications business to gradually improve in the future.
On the property leasing front, Cheung Kong, a subsidiary of CK Hutchison, reported a 4.5% decrease in leasing income for the first half of the year. Office rental income specifically fell by 14.7%, while revenue from hotels and serviced suites doubled year-on-year. The hotel industry has experienced steady recovery, with occupancy rates reaching 75%.
Despite the challenges faced by its various businesses, Li Zeju emphasized that the company remains financially sound. He expressed uncertainty regarding future share repurchases but highlighted that repurchases would strengthen shareholder returns and demonstrate the company’s financial stability.
Overall, CK Hutchison’s mid-term performance decline highlights the challenges faced by the company in a volatile global economy. The company remains optimistic about the long-term prospects of its businesses and is actively strategizing to navigate current market conditions.