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Li Ka-shing’s CK Asset to buy European cash cows amid slumping profits

蘋果日報 2021/03/19 05:52


The property arm of Hong Kong tycoon Li Ka-shing’s empire plans to buy stakes in four utilities assets in Europe as company profits fall amid an “uncertain” economic environment brought by COVID-19.
CK Asset Holdings would make the acquisitions from the billionaire’s charitable foundation, the company said on Thursday at its earnings announcement.
It would require the issuance of some 333 million new shares, to be passed to the Li Ka Shing Foundation at HK$51 (US$6.57) per share. The company would then buy back the same amount of shares at the same price to “minimize any dilutive impact on the shareholding interest.”
The move would effectively increase the CK Assets shareholdings of the Li family and associated shareholders from 36% to 45%, spurring rumors of a potential privatization of the Hong Kong-listed firm, according to Apple Daily.
CK Asset is eyeing increased holdings in UK Power Networks, Northumbrian Water, Wales and West Utilities, and Dutch company Enviro Energy, in purchases worth a total of HK$17 billion.
The proposed per-share pricing of the acquisitions spells a 8.4% premium over Thursday’s closing of HK$47.05 for CK Asset. Company chairperson Victor Li said the deals were meant to “create value” for shareholders and should be positive for the stock.
The acquisition plans were announced as CK Asset reported a slump in profits pulled down by “severely impacted” hotel operations, aircraft leasing and pub operations, according to a filing to the Hong Kong Stock Exchange. The company’s 2020 underlying profit fell by 32.5% to HK$19.4 billion. Property sales plummeted by some 40 percent to HK$38.67 billion.
In the filling, the company said its outlook remained vague, with an economic recovery hinged upon the coronavirus pandemic and other uncertainties arising from Brexit, global quantitative easing policies and the Sino-United States trade relationship.
It announced a final dividend of HK$1.46 a share, putting the full-year dividend at HK$1.80. Executives told reporters at the earnings announcement that the utilities deals would generate recurrent cash flow that would benefit the company’s finances.
Analyst Kenny Wen of Everbright Sun Hung Kai doubted the claim. He said that only time would tell whether those European deals carried risks or would become new cash-flow engines for CK Asset amid the challenging environment.
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