CK Hutchison is the holding company for the diversified interests of Hong Kong’s wealthiest man, Li Ka Shing. It owns the world’s largest port network, with interests in six of the ten largest ports. It also owns A.S. Watson, the world’s largest health and beauty retailer, with 16,500 stores in 28 countries. It has a 75.7% stake in CK Infrastructure, Hong Kong’s largest listed infrastructure company with interests in energy, water, transportation, and waste management in seven countries. And it owns 3Telecom Group, which has 40 million mobile users in Europe and 115 million in Indonesia, Vietnam, and Sri Lanka.
Income Investor
The most important development for CK Hutchison in recent weeks has been the agreement to sell its interests in all of its ports except for those in China and Hong Kong to major US investment house Blackrock and its subsidiary Global Infrastructure Partners. The price is US$14.2 billion, and US$19 billion in cash proceeds to the group after repayment of shareholder loans and adjusting for minority interests. This includes its 80% interest in the Hutchison Ports group, which comprises 43 ports with 199 berths in 23 countries together with its operating systems and IT. Perhaps most importantly, it also includes its 90% interest in Panama Ports Company, which owns two of the four port terminals at either end of the Panama Canal at Cristobal and Balboa.
It makes sense to Sell now in case geopolitical issues prevent the deal going through, even though CK Hutchison’s diversified collection of assets remains cheaply valued. With dividends, we have a breakeven total return. - Gavin Graham
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