Cheung Kong Infrastructure Holdings (CKI) Chairman Victor Li said he would not use the word "disappointed" to describe his feelings over his company's removal from the Hang Seng Index (HSI) in the latest reshuffle.

Li attributed the exclusion to the low free-flow of the company's shares, and he said it had nothing to do with the company's financial status.

He stressed that the company's market capitalization and profitability remain healthy, despite the share turnover falling short of other HSI constituents.

"In a technical sense, the free-flow of stocks can be enhanced by issuing new shares," he said. "However, given that the net asset value per share is higher than the current trading price, and with the company having an abundance of cash on hand, we don't see any urgency to issue new shares."

He said it would be irrational to issue new shares solely to boost share circulation.

CKI currently has about HK$8.2 billion cash on hand. Li said that the company isn't raising any debt in its current stage.

"We don't rule out the possibility of the company rejoining the index when after issuing new shares in the future," he said.

Given that CKI is one of the main shareholders of HK Electric, Li shrugged off the notion that income from the electricity vehicle would be affected in view of the implementation of a new scheme of control agreement.

Under the new agreement, the return of two local electricity companies - HK Electric and CLP Holdings - would lower CKI's return from 13.5 percent to 9.99 percent of their total assets.

"Aside from the (return of) HK Electric, the overseas businesses of CKI is seeing a notable growth, and we're actively seeking acquisition opportunities to maintain the growth pace," Li said.

HK Electric Managing Director Tso Kai-sum said that his company recorded a 1.8 percent growth in electricity sales through April.

Despite the rise in oil prices, Tso said the company also has no intention of raising electricity fees or the fuel surcharge this year.

He added that HK Electric is also looking for overseas acquisitions, although its overseas businesses won't exceed 30 percent of the company's overall revenues in the short term.

(HK Edition 05/16/2008 page2)