Li Ka-Shing goes shopping in Europe as Hong Kong sales slump

Published: 6:06 PM, August 2, 2013
Updated: 10:00 AM, August 4, 2013

HONG KONG – Mr Li Ka-Shing, Asia’s richest man, said he will increase his telecommunications market share in Europe and seek acquisitions as slowing property sales in Hong Kong depress profits at flagship Cheung Kong Holdings, the Bloomberg news agency reported.

Home sales in Hong Kong, where Cheung Kong is the second-biggest developer, will continue to be affected by government measures, Mr Li, 85, said on Thursday after the company reported a 13 per cent decline in first-half profit. Unit Hutchison Whampoa posted a 23 per cent advance in net income, boosted by investments in power stations and energy.

Mr Li is benefiting from his acquisitions in Europe and Canada, as China’s slowing economy and property curbs damp growth at home. He is accelerating overseas investments as Hutchison Whampoa ponders exiting its ParknShop supermarket chain in Hong Kong, while buying Telefonica’s Irish unit.

“They’ve taken advantage of the downturn in Europe to invest in projects with good returns,” said Mr Louis Wong, a director at Phillip Securities HK. The infrastructure unit “has been investing in power, utilities, and water companies. That is its growth strategy”.

“Each of our major operating divisions will continue to invest and expand,” Mr Li said in the Hutchison Whampoa statement on Thursday. “The group will continue to grow in the second half of 2013.”

3 Group Europe, which runs mobile services, “will increase market share,” Mr Li said. The energy business is developing a gas project in the South China Sea and an oil sands project in Canada, the company said.

Mr Li is also paying 943.7 million euros (S$1.6 billion) to buy AVR Afvalverwerking to add waste processing in Europe.

“Its profit growth potential in Hong Kong is quite limited,” said Mr Ka Kei Lam, an associate director at Redford Securities. “If it wants to increase its earnings per share and dividend payout going forward, investing abroad is probably a better deal.”