CK Hutchison Holdings – the port-to-telecom conglomerate founded by tycoon Li Ka-shing – sees the coronavirus pandemic as not having such a severe effect on its telecommunication and utility operations as on the group’s retail and port-related business.
“CK Hutchison is a well-diversified conglomerate in different business sectors and geographical locations with strong financial strengths that can weather any business storm,” Chairman Victor Li Tzar-kuoi, the elder son of Li Ka-shing, told the company’s annual general meeting on Thursday.
We’re confident our business will rebound sharply after the outbreak because of our quality business assets
Victor Li Tzar-kuoi
chairman of CK Hutchison Holdings
“The pandemic will only last a short term, so we’ll not change our investment strategy. We’re confident our business will rebound sharply after the outbreak because of our quality business assets. It’s also a good time to seek investment opportunities in this difficult time,” he said.
CK Hutchison’s share price shed 0.7 percent to close at HK$55.95 ($7.22) apiece on Thursday, while the benchmark Hang Seng Index tumbled 1.45 percent to close at 23,829.
Group Co-Managing Director Fok Kin-ning said the pandemic has not adversely affected the telecommunication and utility segment because both are basic utility services for every household. “In fact, the outbreak has forced more people to stay at home and more people need telecommunication services.”
The company recorded a loss in its Canadian-based Husky Energy investment arm amid plunging oil prices, and saw a significant provision in asset value for this investment in the first quarter of this year. However, losses in the energy division in the full financial year are expected to be offset by gains from the consolidation of telecommunication assets in Australia.
“The group’s telecommunication segment is strong, as it’s ready to launch 5G services in various European markets. We’re in full gear building 5G networks and rolling out 5G services, and we expect our position in the UK telecommunications market turning from a defensive position into a leading player in the market,” said Fok.
On the other hand, the conglomerate’s retail-and-port services sector faltered due to the pandemic.
“We expect profits for the retail division to tumble 50 percent from a year ago in the first half of 2020, while profits from the ports-related sector have dived 20 percent due to a 7 to 8 percent fall in throughput at Hong Kong ports,” said Fok.
The group’s retail stores on the Chinese mainland, which reopened in March, saw a sharp rebound in sales volume last month. In Europe, some of its retail outlets are also back in business. The conglomerate believes that sales generated from its stores in Hong Kong and other cities in Asia can offset the losses at its European outlets.
