Cheung Kong Infrastructure Holdings Ltd, the utility controlled by billionaire Li Ka-shing, posted a 10 percent drop in its annual profit after benefiting a year earlier from a one-off gain selling three mainland power stations.

Net income fell to HK$5.03 billion in 2010 or HK$2.23 a share, from HK$5.6 billion or HK$2.47 a share in 2009, Cheung Kong Infrastructure said in a statement to the Hong Kong Stock Exchange Wednesday. That compares with a median estimate of HK$4.85 billion in a Bloomberg survey of eight analysts.

Cheung Kong Infrastructure has invested in electricity, gas, water and road assets in Australia, Canada, the UK, New Zealand and the mainland to counter slowing growth in the power distribution market in Hong Kong. The company completed the sale of the three power plants to Power Assets Holding Ltd, also controlled by Li, in April 2009 for HK$5.68 billion.

After adjusting for this item, an increase in profit of about 18 percent would have been recorded, the company said.

Earnings were boosted in the last two months of 2010 by HK$432 million after Cheung Kong Infrastructure led a group to buy Electricite de France SA's power network in the UK for 5.8 billion pounds sterling ($9.4 billion), according to the statement.

Shares of Cheung Kong Infrastructure climbed 26 percent in the past 12 months in Hong Kong trading, outstripping the 10 percent gain in the benchmark Hang Seng Index. The stock closed down 2.47 percent at HK$37.50 in local trading Wednesday.

The company has cash on hand of more than HK$5 billion and is pursuing investment opportunities around the world, Cheung Kong Infrastructure said in the statement. The utility is looking at more than 20 global assets as possible acquisitions, according to Chairman Victor Li on Tuesday.

However, PPL Corporation beat an offer from Cheung Kong Infrastructure to buy E ON AG's UK power network, according to two people familiar with the matter. The US utility said Tuesday it had agreed to pay 3.5 billion pounds sterling for the assets, excluding 500 million pounds of existing debt that it will assume.

Cheung Kong Infrastructure owns a 39 percent stake in Power Assets.

This year, Cheung Kong Infrastructure's net income may increase to HK$6.9 billion, according to a median estimate of eight analysts surveyed by Bloomberg.

The shares are rated a "buy" by 10 out of 14 analysts surveyed by Bloomberg. Four rate the stock a "hold".

Bloomberg

(HK Edition 03/03/2011 page3)