Wednesday, March 25, 2009

Cheung Kong's Profit Falls First Time Since 2003

Cheung Kong (Holdings) Ltd., Hong Kong billionaire Li Ka-shing's property developer, posted its first drop in full-year profit since 2003 amid lower earnings from its Hutchison Whampoa Ltd. unit and home sales.Net income fell 44 percent to HK$15.5 billion ($2 billion), or HK$6.70 a share, from HK$27.7 billion, or HK$11.95, in 2007, the world’s second-biggest builder by market value said in a statement to the Hong Kong stock exchange today. That is in line with the median HK$16 billion estimate of six analysts compiled by Bloomberg.

Cheung Kong, which grew out of the plastics business Li founded more than 50 years ago, posted steady real estate income as it sold more homes than rivals Sun Hung Kai Properties Ltd. when prices slid 25 percent from last year’s peak. Cheung Kong’s overall profit fell as Hutchison didn’t repeat a HK$35.8 billion year-earlier gain from selling its investment in an Indian mobile-phone carrier.

"Most of it is Hutchison" dragging down Cheung Kong's earnings, Danie Schutte, a Hong Kong-based analyst at CLSA Asia- Pacific Markets, said before the earnings announcement. “On the property side, they locked in a lot of sales before prices came down. There's a question mark over" whether Cheung Kong can repeat this in 2009, he said.Profit excluding earnings from Cheung Kong’s 49.97 percent stake in Hutchison, Li’s telecommunications company, dropped 46 percent to HK$6.69 billion from HK$12.4 billion.

Goldman, Deutsche

Shares of Cheung Kong, the second-worst performer this year in the six-member Hang Seng Property Index, rose 2.1 percent to HK$71.60 at the 12:30 p.m. trading break in Hong Kong, before earnings were announced. The stock has lost 2.3 percent this year, compared with the 3.2 percent decline in the Hang Seng Index.The Hong Kong landlord for companies including Goldman Sachs Group Inc. and Deutsche Bank AG said sales excluding jointly-developed property projects fell 3 percent to HK$12.9 billion from HK$13.3 billion. Cheung Kong will pay a final dividend of HK$1.95 a share, unchanged from 2007.

Cheung Kong was Hong Kong's biggest seller of new private homes last year, at 2,838 units, Centaline Property Agency Ltd., one of the city’s largest real estate agencies, said in January.Li, 80, is ranked No. 16 on Forbes magazine’s list of the world’s richest people with a fortune of $16.2 billion, the publication said earlier this month.

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