CK Hutchison’s ports deal in focus as conglomerate reports 11% rise in H1 underlying profit

[HONG KONG] CK Hutchison posted a 11 per cent rise in first-half underlying profit on Thursday (Aug 14), as investors look for comments on the status of the Hong Kong conglomerate’s US$22.8 billion ports business sale to a consortium.

The ports-to-telecoms group said in a filing that underlying profit climbed to HK$11.3 billion (S$1.9 billion) on a post-IFRS 16 basis. It compares with UBS forecast of a 6 per cent rise.

However, including one-time non-cash accounting loss, including from the merger of 3UK and Vodafone UK, the net profit dropped 92 per cent from a year ago to HK$852 million.

CK Hutchison is due to discuss its interim results with analysts, offering the first opportunity to quiz the management about the plan to sell the ports business since it was announced in March.

Departing from its usual practice, CK Hutchison did not brief analysts or media about its 2024 earnings, released in March after it made public its plan to sell the business, which includes two ports along the strategic Panama Canal.

Since the plan to sell 43 ports in 23 countries to a group led by BlackRock and Italian billionaire Gianluigi Aponte’s family-run shipping firm MSC was announced, CK Hutchison has faced a firestorm of criticism from China.

In the latest announcement on Jul 28, the conglomerate said it was in talks with the consortium pursuing its ports business to add a Chinese “major strategic investor” to the bid, after their exclusive talks ended.

It said changes would be necessary to secure regulatory approval in relevant jurisdictions and that it would allow as much time as needed to achieve that.

Sources have told Reuters the investor was Cosco – one of the world’s dominant, vertically integrated marine transportation firms. They said Cosco was seeking a bigger stake while the other parties in the consortium were keen to keep it a minority.

While any stake by Cosco is not yet clear, an inclusion of a Chinese investor would alleviate China’s national security concerns and have its blessing, the sources and other experts have said. Cosco did not respond to a request last month for comment.

US President Donald Trump had also earlier called for the removal of Chinese ownership in the Panama Canal. More than 40 per cent of US container traffic, valued at roughly US$270 billion annually, transits the Panama Canal.

Shares of CK Hutchison closed down 0.4 per cent on Thursday ahead of the results, in line with the Hang Seng Index.

Morgan Stanley rated CK Hutchison “overweight” last month, citing potential strategic transactions, attractive valuation, and a strong balance sheet. REUTERS