Hutchison, Cheung Kong Profit Up on India Sale

Hutchison Whampoa, the ports-to-property conglomerate controlled by tycoon Li Ka-shing, posted a 53% jump in first-half profit on Thursday as gains from the sale of its Indian cellphone unit overcame 3G telecoms losses.

The sprawling company, which is the world's biggest container ports operator and has extensive holdings in retail, property, energy, infrastructure and telecoms, said losses before interest on taxes at its third-generation mobile phones business narrowed slightly to HK$11.3 billion from HK$11.99 billion a year earlier.

Hutchison, whose US$25 billion investment in 3G mobile telecoms has been a drag on its earnings since 2000, met its target of generating sustainable earnings before interest, tax, depreciation and amortization (EBITDA), after customer acquisition costs on a monthly basis, during the first half.

The company said it expects to maintain that cash flow target in the second half.

Sister property developer Cheung Kong, which owns nearly half of Hutchison, posted a 52% rise in first-half net profit helped by one-off gains from Hutchison.

Cheung Kong posted net profit of HK$18.54 billion (US$2.37 billion), beating the HK$15.8 billion average forecast of two analysts contacted by Reuters Estimates. Excluding the Hutchison contribution, its profit rose 48% to HK$4.17 billion.

Alex Tang, research director at Core Pacific-Yamaichi International, said there were no surprises in Hutchison's results. "It is unlikely that the stock would outperform the market in the short term," he added.

Hutchison shares rose, extending a rebound on Wednesday after it denied a media report that its chairman Li Ka-shing had cut his stake in the company.

Li gave an upbeat outlook despite increasing volatility and high energy prices. "The economies of the mainland and Asia region remain healthy and should continue to support a growth trend from which the group's diversified portfolio of businesses will continue to benefit," he said in a statement.

Profit Matches Forecasts

January-June net net income of HK$28.76 billion ($3.68 billion) for the six months through June, compared with HK$18.8 billion in the year-earlier period -- in line with the average forecast of HK$28.7 billion from six analysts polled by Reuters.

Earnings were boosted by exceptional gains of HK$35 billion, thanks to the sale of its mobile phone network in India to Britain's Vodafone. It also booked a revaluation gain on investment properties of HK$767 million.

Otherwise the company would have been dragged into the red as a result of 3G losses.

Hutchison said it expects to achieve positive monthly 3G earnings before interest and taxes (EBIT) on a sustainable basis in 2008, barring unfavorable regulatory or market changes.

The company said it now has 15.9 million 3G subscribers, compared with 14.7 million in late March and exceeding Goldman Sachs' forecast for 15.7 million.

Li, known in Hong Kong as "Superman" for his deal-making prowess, built a plastic flower business into a global empire that stretches across 55 countries, employs more than 220,000 people and has made him the richest man residing in Asia.

For the full year, Hutchison and Cheung Kong's earnings are forecast to grow 77% and 45%, respectively, according to Reuters Estimates.