CK Hutchison's US$22.8 billion ports deal in focus as conglomerate reports results

New Straits Times

2 days ago

HONG KONG: Investors will look for comments from CK Hutchison on the status of its US$22.8 billion ports business sale to a consortium led by US investment firm BlackRock when the Hong Kong conglomerate reports its results on Thursday.
The ports-to-telecoms group will present its interim results at 5 p.m. (0900 GMT), offering analysts 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 July 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 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 eased 0.2 per cent on Thursday ahead of the results, versus a 0.1 per cent fall in the Hang Seng Index.
UBS forecast last month a 6 per cent rise in underlying profit for the first six months, as ports and retail business growth and a weakening dollar offset the negative impact of oil prices. However, one-off losses, including from the completion of the 3UK merger, could weigh on the conglomerate's net profit.
Morgan Stanley rated CK Hutchison "overweight" last month, citing potential strategic transactions, attractive valuation, and a strong balance sheet.