3g-g
25th August 2005, 10:18 PM
From Reuters (http://today.reuters.com/investing/financeArticle.aspx?type=marketsNews&storyID=2005-08-25T120558Z_01_HKG258975_RTRIDST_0_HONGKONG-HUTCHISON-CHEUNGKONG-WRAPUP-1-PICTURE.XML)
Not as bad as I thought it'd be, but there's the lesson on how to hide the poorer performace of your telecomms arm, just tell everyone about how good everything else is!
HONG KONG, Aug 25 (Reuters) - Hutchison Whampoa Ltd. (0013.HK: Quote, Profile, Research), tycoon Li Ka-shing's flagship conglomerate, posted a 10 percent rise in first-half profits on Thursday as strength in its ports and energy businesses and an accounting gain overcame startup losses in its 3G telecoms business.
Those results and a roaring Hong Kong property market helped sister firm Cheung Kong (Holdings) (0001.HK: Quote, Profile, Research), a real estate developer that owns almost half of Hutchison, generate a nearly 52 percent gain in first-half earnings.
Li said he expects the Hong Kong property market, with prices up 75 percent from a 2003 trough, to see further healthy growth.
Hutchison's $25 billion investment in 3G, which for five years has overshadowed its other businesses such as retail and property, faces a crucial test as its Italian 3G operation plans an IPO by year-end, market conditions permitting, with the UK unit set to follow in 2006.
Hutchison, which the 77-year-old Li built from a plastic flower firm into a sprawling empire, posted net profit of HK$11.82 billion ($1.5 billion) in the six months to June, compared with a restated HK$10.76 billion a year earlier.
Hutchison's results beat the average net profit forecast of HK$10.27 billion from 10 analysts polled by Reuters, although expectations varied widely, given the exceptional items.
"It's acceptable. The stock market will respond sensibly. On Hutchison there is a hefty writedown for 3G, but it's anticipated," said Alfred Chan, chief dealer at Cheer Pearl Investment.
Hutchison was bolstered by exceptional gains of HK$18.6 billion, compared with one-offs of HK$15 billion last year.
Excluding 3G, all of Hutchison's main units delivered profit growth, except for its fast-growing retail and manufacturing arm. Total revenue rose by 33 percent to HK$109.18 billion.
Hutchison said it has 9.4 million 3G users, up from 8.1 million in late March. User growth slowed, as expected, as unsatisfied early subscribers did not renew contracts.
The 3G unit lost HK$10.62 billion before tax and interest in the first half, but the pain was eased by a HK$9.4 billion gain from Hutchison's buyout of its UK 3G partners at a deep discount.
That compared with a loss in the second half of 2004 of HK$24.1 billion, and taking into account the one-off gain, was in line with Goldman Sachs's forecast 3G EBIT loss of HK$20 billion.
"The market has a mixed view on Hutchison stock -- from falling to HK$70 to soaring over HK$100. The main difference is not the results, but whether Hutchison can spin off its Italy 3G business successfully in the fourth quarter," said Antonny Cheng, managing director of Gain Asset Management Ltd.
Shares in Hutchison, which has a market value of $42 billion, are up by 6 percent in 2005, ahead of the nearly 5 percent rise in the Hang Seng Index, closing at HK$77.10 on Thursday.
The entire Hong Kong market was jolted on Tuesday when Citigroup downgraded Hutchison and sister firm Cheung Kong to "sell", citing fierce competition for the 3G business in the UK.
Li said the 3G operation, which spans 10 markets including Italy, the UK, Australia and Hong Kong, would reach EBITDA (earnings before interest, tax, depreciation amortisation) breakeven by year-end, and EBIT breakeven in 2006.
The company also said its Italian operation, its largest, is on track to reach EBITDA breakeven after customer acquisition costs in the month of August.
Hutchison said average revenue per user (ARPU) across its 3G networks, excluding Hong Kong and Israel, in the year through June was 43.11 euros (US$53) per month, with about 23 percent of that from non-voice applications. Customer acquisition costs averaged 274 euros each, in line with the second half of 2004.
DEALS
Hutchison has been on a shopping spree in Europe that makes it the world's biggest operator of drug stores and perfume shops. Earlier this year it paid 530 million euros ($652 million) for France's loss-making Marionnaud Parfumeries (MPAR.PA: Quote, Profile, Research).
Its container port business, the world's largest, has been thriving thanks to robust global trade, while its 35 percent-held Husky Energy (HSE.TO: Quote, Profile, Research), Canada's fifth-largest oil producer and refiner, also performed strongly thanks to high oil prices.
Investors have long speculated that Li may choose to cash in his Husky stake, especially given the recent rally in its share price, but Li said he was not currently looking to sell.
"It's not for sale now, but I can't promise forever," he told reporters.
The consensus market view on Hutchison is "outperform", even though its full-year earnings are forecast to decline this year and next, according to analysts polled by Reuters Estimates.
Hutchison's lonely bullishness on 3G -- it spent billions on service rollouts before foes such as Vodafone Group (VOD.L: Quote, Profile, Research) joined the fray -- was long a drag on its shares.
Investors hope the Italy IPO, expected to be worth about 1 billion euros, drives its share price.
Hutchison's profit included a gain of HK$3.7 billion on the revaluation of investment property resulting from an accounting change. As expected, it also reported one-time gains of HK$14.9 billion from asset trades. (euro=US$1.23, US$=HK$7.8) (Additional reporting by Kennix Chim, Joy Leung, Dominic Whiting and Tara Joseph)
Not as bad as I thought it'd be, but there's the lesson on how to hide the poorer performace of your telecomms arm, just tell everyone about how good everything else is!
HONG KONG, Aug 25 (Reuters) - Hutchison Whampoa Ltd. (0013.HK: Quote, Profile, Research), tycoon Li Ka-shing's flagship conglomerate, posted a 10 percent rise in first-half profits on Thursday as strength in its ports and energy businesses and an accounting gain overcame startup losses in its 3G telecoms business.
Those results and a roaring Hong Kong property market helped sister firm Cheung Kong (Holdings) (0001.HK: Quote, Profile, Research), a real estate developer that owns almost half of Hutchison, generate a nearly 52 percent gain in first-half earnings.
Li said he expects the Hong Kong property market, with prices up 75 percent from a 2003 trough, to see further healthy growth.
Hutchison's $25 billion investment in 3G, which for five years has overshadowed its other businesses such as retail and property, faces a crucial test as its Italian 3G operation plans an IPO by year-end, market conditions permitting, with the UK unit set to follow in 2006.
Hutchison, which the 77-year-old Li built from a plastic flower firm into a sprawling empire, posted net profit of HK$11.82 billion ($1.5 billion) in the six months to June, compared with a restated HK$10.76 billion a year earlier.
Hutchison's results beat the average net profit forecast of HK$10.27 billion from 10 analysts polled by Reuters, although expectations varied widely, given the exceptional items.
"It's acceptable. The stock market will respond sensibly. On Hutchison there is a hefty writedown for 3G, but it's anticipated," said Alfred Chan, chief dealer at Cheer Pearl Investment.
Hutchison was bolstered by exceptional gains of HK$18.6 billion, compared with one-offs of HK$15 billion last year.
Excluding 3G, all of Hutchison's main units delivered profit growth, except for its fast-growing retail and manufacturing arm. Total revenue rose by 33 percent to HK$109.18 billion.
Hutchison said it has 9.4 million 3G users, up from 8.1 million in late March. User growth slowed, as expected, as unsatisfied early subscribers did not renew contracts.
The 3G unit lost HK$10.62 billion before tax and interest in the first half, but the pain was eased by a HK$9.4 billion gain from Hutchison's buyout of its UK 3G partners at a deep discount.
That compared with a loss in the second half of 2004 of HK$24.1 billion, and taking into account the one-off gain, was in line with Goldman Sachs's forecast 3G EBIT loss of HK$20 billion.
"The market has a mixed view on Hutchison stock -- from falling to HK$70 to soaring over HK$100. The main difference is not the results, but whether Hutchison can spin off its Italy 3G business successfully in the fourth quarter," said Antonny Cheng, managing director of Gain Asset Management Ltd.
Shares in Hutchison, which has a market value of $42 billion, are up by 6 percent in 2005, ahead of the nearly 5 percent rise in the Hang Seng Index, closing at HK$77.10 on Thursday.
The entire Hong Kong market was jolted on Tuesday when Citigroup downgraded Hutchison and sister firm Cheung Kong to "sell", citing fierce competition for the 3G business in the UK.
Li said the 3G operation, which spans 10 markets including Italy, the UK, Australia and Hong Kong, would reach EBITDA (earnings before interest, tax, depreciation amortisation) breakeven by year-end, and EBIT breakeven in 2006.
The company also said its Italian operation, its largest, is on track to reach EBITDA breakeven after customer acquisition costs in the month of August.
Hutchison said average revenue per user (ARPU) across its 3G networks, excluding Hong Kong and Israel, in the year through June was 43.11 euros (US$53) per month, with about 23 percent of that from non-voice applications. Customer acquisition costs averaged 274 euros each, in line with the second half of 2004.
DEALS
Hutchison has been on a shopping spree in Europe that makes it the world's biggest operator of drug stores and perfume shops. Earlier this year it paid 530 million euros ($652 million) for France's loss-making Marionnaud Parfumeries (MPAR.PA: Quote, Profile, Research).
Its container port business, the world's largest, has been thriving thanks to robust global trade, while its 35 percent-held Husky Energy (HSE.TO: Quote, Profile, Research), Canada's fifth-largest oil producer and refiner, also performed strongly thanks to high oil prices.
Investors have long speculated that Li may choose to cash in his Husky stake, especially given the recent rally in its share price, but Li said he was not currently looking to sell.
"It's not for sale now, but I can't promise forever," he told reporters.
The consensus market view on Hutchison is "outperform", even though its full-year earnings are forecast to decline this year and next, according to analysts polled by Reuters Estimates.
Hutchison's lonely bullishness on 3G -- it spent billions on service rollouts before foes such as Vodafone Group (VOD.L: Quote, Profile, Research) joined the fray -- was long a drag on its shares.
Investors hope the Italy IPO, expected to be worth about 1 billion euros, drives its share price.
Hutchison's profit included a gain of HK$3.7 billion on the revaluation of investment property resulting from an accounting change. As expected, it also reported one-time gains of HK$14.9 billion from asset trades. (euro=US$1.23, US$=HK$7.8) (Additional reporting by Kennix Chim, Joy Leung, Dominic Whiting and Tara Joseph)