LI, Tao @ Hong Kong

The largest diversified infrastructure company listed on the Hong Kong Stock Exchange, Cheung Kong Infrastructure Holdings (CKI), has reported 26 percent annual net profit growth yesterday, due to a strong mainland portfolio performance last year.

Although profits of CKI’s local investments traced an evident downturn in 2009, the strong momentum of its mainland and overseas investments countered the loss, which has encouraged the company to further explore markets outside the city.

The utilities and roads company said its net profit for 2009 rose to HK$5.57 billion from the previous year’s HK$4.42 billion.

Together with the interim dividend, total dividend recommended for the year was HK$1.20, a 5.8 percent increase over 2008.

The overall profit gain was mainly due to its investments in the mainland, which brought in a total HK$1.72 billion last year, up 29 percent from the year earlier.

In February 2009, the group sold its three power plant assets in Guangdong and Jilin provinces to its affiliate Hongkong Electric Holdings (HKE) for HK$5.68 billion.

CKI said it generated a one-off gain of HK$1.31 billion from the disposal.

Kam Hing-lam, group managing director of CKI, said earnings from HKE continued to be the largest contributor to the company, which contributed over 42 percent of the total profit to the group in 2009. However, the city’s second largest electric supplier recorded a 17 percent decrease in profits compared to the previous year.

The group also invests in Australia, the UK, Canada, the Philippines, and New Zealand, besides Hong Kong and the mainland, with businesses ranging from electricity generation to water and natural gas supply.

Kam said a strong cash position of over HK$10 billion will well position the group in considering large-scale acquisitions. It is currently studying potential targets and will continuously seek to acquire additional overseas businesses to offset slowing growth in the power distribution market in Hong Kong.

Chief Operating Officer Andrew Hunter said at the media briefing that the company will put in a bid for Electricite de France (EDF)’s three power distribution businesses in the UK by March.

“These assets produce predictable and steady returns. These sorts of regulated and monopolized business are exactly what CKI is familiar with and interested in,” said Hunter.

Gary Chiu, an analyst at HSBC Securities Asia in Hong Kong said the group “already has assets in the UK and knows the business environment there. It’s a highly regulated and mature market, which suits the company’s low-risk strategy.”

CKI last year achieved more than doubled profits in Canada and New Zealand, and a 12 percent profit gain in its UK business. Its Australian businesses recorded a 5 percent drop, due to the tumbling Australian dollar in 2009.

(HK Edition 03/05/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/05/content_9540113.htm

Financial Secretary John Tsang said he is proud of the city’s economic growth last year, despite the fact that the government’s economic forecast turned out to be wide of the mark.

“We have the worst economic growth since we started collecting statistics, but significant income from stamp duties and land premiums last year brought an unexpected surplus to the city,” said Tsang.

Fresh after delivering his annual Budget Speech last week, Tsang was speaking in a forum with students and academics of the University of Hong Kong on the city’s public finance and long-term strategic development yesterday.

Regarding the deviation in forecasting the city’s economy, Tsang said it was not that he was being conservative in making predictions, but that the momentum of Hong Kong’s economy was far beyond his expectation.

“Land sales increased 126 percent to 73.3 billion, representing 2.3 percent in GDP in comparison to the 1 percent weight in the past. Stamp duties on the other hand, increased 2.5 percent compared with the predicted 1.5 percent, which, in fact, is still well above the 1.3 percent ten-year average,” he noted.

When asked if he blamed himself for the faulty estimation, Tsang said “I am not embarrassed at all, but feel proud of the city’s economy growth, especially in such a difficult year.”

When asked if more subsidies would be allocated to all industries instead of simply to innovative and technology industries, Tsang said although Hong Kong is not carrying out incentive schemes like many other neighboring economies, the city’s simple tax system levies a light tax burden on private enterprises, compared with the value-added tax systems in other economies.

Tsang said the Hong Kong government is in discussions and consultations with banks, with a view to upgrade the 100 percent deposit guarantee scheme from the current HK$100,000 to HK$500,000 by the end of this year, which he said would cover the great majority of accounts in Hong Kong.

As for the wine duties exemption in effect since last year, Tsang said the main reason for removing the wine tax is to create more jobs for the city, and to help the industry better grasp business opportunities.

“Past experience proves the policy was indeed successful. A good number of jobs related to wine handling, storage, auction and trading have been created with the introduction of this measure,” he said.

As for the global economy, Tsang said Hong Kong is also making appropriate plans for exits, to cope with the consequences of the possible stimulus withdrawal of big economies. However, Tsang said since politics sometimes help a country to make economic plans, the current US political decision-makers are not likely to make bold moves at this moment.

(HK Edition 03/02/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-03/02/content_9521668.htm