Hutchison Whampoa Ltd. (13), controlled by Asia’s richest person Li Ka-shing, posted first-half earnings that beat analysts’ estimates on growth at its infrastructure business.
Net income rose 23 percent to HK$12.4 billion ($1.6 billion) in the six months through June from HK$10.2 billion a year earlier, the Hong Kong-based company said yesterday. That compares with the HK$10.8 billion median of three analysts’ estimates compiled by Bloomberg News.
Growth at units Cheung Kong Infrastructure Holdings Ltd. (1038) and Husky Energy Inc. (HSE) boosted earnings as Li, 85, considers selling Hong Kong supermarket chain ParknShop. Hutchison is expanding in faster growing industries, saying in June that it agreed to buy Telefonica SA (TEF)’s Irish unit for as much as 850 million euros ($1.1 billion).
“It would be very wise of Hutchison to sell ParknShop and diversify its business,” Louis Tse, a Hong Kong-based director at VC Brokerage Ltd., said yesterday. “It can get into other businesses with stronger growth like infrastructure and energy.”
First-half revenue at Hutchison, with investments in more than 50 countries, increased 6.5 percent to HK$123.3 billion. It reported a “total revenue” of HK$199.1 billion that includes a proportionate share from associated companies.
Hutchison rose 0.2 percent to close at HK$87.70 in Hong Kong trading before the results. The stock has advanced 8.4 percent this year, compared with a 2.5 percent decline for the benchmark Hang Seng Index.
First-half net income at Cheung Kong Infrastructure, with businesses in Hong Kong, the U.K., Australia, Canada, New Zealand and mainland China, climbed 10 percent from a year earlier to HK$5.17 billion.
The unit this year bought New Zealand landfill operator EnviroWaste for NZ$490 million ($389 million). Earnings in mainland China fell 14 percent because of lower traffic on a road it operates and the expiry of a tax concession.
“Cheung Kong Infrastructure will continue to be the star division in Hutch’s portfolio,” Citigroup Inc. analysts led by Anil Daswani, who have a neutral rating on Hutchison, wrote in a July 29 report.
Husky Energy’s profit climbed 12 percent to C$1.14 billion ($1.1 billion), Hutchison said. The Calgary, Alberta-based oil producer is about 70 percent controlled by Li, according to data compiled by Bloomberg.
“Whilst uncertainty will remain a challenge for the second half of 2013, major economies are showing signs of stabilization and gradual recovery,” Li said in the statement. “Each of our major operating divisions will continue to invest and expand.”
KKR & Co. (KKR:US), the private-equity firm run by Henry Kravis and George Roberts, is evaluating a bid for ParknShop, according to two people with knowledge of the matter. Hutchison is seeking $3 billion to $4 billion and has asked potential buyers to submit bids by Aug. 16, people with knowledge of the process have said. ParknShop is one of the two biggest supermarket businesses in Hong Kong.
The retail division, its biggest, contributed 38 percent to Hutchison’s revenue, the company said. The business, which includes ParknShop, European cosmetics chain Marionnaud, and Hong Kong electrical appliance retailer Fortress, had sales that rose 6 percent to HK$62 billion in the period. Contributions from associates and joint ventures boosted the unit’s revenue to HK$75.8 billion.
The division’s sales at shops open more than a year grew 2.7 percent in Asia and 2.9 percent in Europe. It has more than 11,000 stores in 33 markets as of June.
3 Group Europe’s 3G customer base increased 9 percent to more than 25.6 million customers, Hutchison said. Earnings before interest, taxes, depreciation and amortization for the phone unit rose 38 percent to HK$5.7 billion. Revenue from Hutchison Telecommunications Hong Kong Holdings Ltd. (215) fell by 8.6 percent to HK$6.15 billion with Ebitda increasing to HK$1.5 billion from HK$1.45 billion.
Li has a net worth of $27.1 billion, making him the richest person in Asia, according to data compiled by Bloomberg.
Hutchison proposed to pay an interim dividend of 60 Hong Kong cents per share, compared with 55 Hong Kong cents a year ago.
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