CKI eyeing up more acquisitions to boost profit

Updated: 2011-07-29 09:06

By Joy Li(HK Edition)

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CKI eyeing up more acquisitions to boost profit

Cheung Kong Infrastructure Holdings (CKI) reported a 96 percent rise in net profit for the first half of this year on gains from its newly acquired UK assets.

The net profits attributable to shareholders reached HK$3.98 billion in the six months to June, almost doubling the HK$2 billion raked in last year, the utility giant said in its interim results released on Thursday. The result beat a median estimate of HK$3.45 billion in a Bloomberg survey of three analysts.

The company's board declared an interim dividend of HK$0.365 per share, up 11 percent over the same period last year.

The surge in profit was mainly boosted by Seabank Power and UK Power Networks, two UK businesses the company acquired in 2010. Profit contribution from the UK portfolio leapt 770 percent to HK$1.88 billion from HK$216 million a year ago.

Power Assets, the smaller of the two power suppliers in Hong Kong and 38 percent owned by CKI, generated HK$1.56 billion profit in the first half, up 48 percent from a year ago.

"During the first half of 2011, the group achieved a strong performance that was powered by the positive impact of the UK Power Networks acquisition. This significant acquisition has substantially expanded CKI's global portfolio and greatly enhanced the earnings base," said Victor Li, the company's chairman.

Shares of CKI gained 3.48 percent to HK$44.65 at the end of Thursday's trading. The benchmark Hang Seng Index (HSI) rose 0.13 percent to 22,570.74. They have advanced 26 percent since the start of the year, compared to a 2 percent drop in the HSI.

The roads and utility company, which has assets in the UK, New Zealand, Australia, Canada, and the mainland, will stick to its strategy of building up portfolios around the globe.

"With a strong balance sheet and extensive acquisition experience, CKI will continue to advance our acquisition trail and pursue more investment opportunities. We are currently assessing a number of new projects around the world," Li added.

To fund further expansion, the roads and utility company issued 84.5 million shares via a share placement this month, which brought in net proceeds of HK$3.4 billion and pulled down the net debt to equity ratio to less than 1 percent.

CKI said on July 11 that it will make a 2.4 billion pound sterling takeover proposal for Northumbrian Water Group Plc, its second foray into the UK. Earlier this year, the company lost its bid for E.ON's UK power grid assets, Britain's second-largest electricity distribution network.

Pierre Lau, Asian utilities analyst with Citigroup Global Markets, thinks that CKI's first placement since its listing in 1996 was "positive" as it will give the company more cash to buy assets.

The acquisition of Northumbrian would add 13 percent to CKI's full-year 2012 net profit, Lau predicted in a research note.

China Daily

(HK Edition 07/29/2011 page2)