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Thursday, August 11, 2016, 17:31

Li Ka-Shing's main companies deliver higher profits

By Bloomberg

HONG KONG - Billionaire Li Ka-shing’s two main companies, CK Hutchison Holdings Ltd and Cheung Kong Property Holdings Ltd, saw higher earnings in the first half of the year, thanks to growth from the European telecommunications business and Chinese property sales.

Profit, excluding earnings from discontinued operations, rose 1.9 percent from a year earlier to HK$15.2 billion ($2 billion) at CK Hutchison, Li’s main holding company. Cheung Kong Property saw underlying profit climb 51 percent to HK$8.3 billion.

Yet headwinds abound. Li, who had urged Britons to vote in favor of staying in the European Union before the June 23 vote, is now bracing for the economic fallout from Brexit as CK Hutchison counts the UK as its biggest earnings contributor. In the Hong Kong property market, the tycoon is seeing prices and transactions drop amid a slowing economy and government efforts to make housing more affordable.

The Bank of England earlier this month cut the nation’s benchmark interest rate and expanded a stimulus plan as it prepares for a downturn. The central bank also cut its economic growth forecast for next year and 2018, citing concerns about weaker investment and consumption.

"The withdrawal of the UK from the European Union will bring with it considerable challenge both for the UK and for Europe for at least the next two to three years," Li said in the CK Hutchison earnings statement. "Macroeconomic and geopolitical uncertainties, together with fragile market sentiment, could potentially lead to a less sustainable recovery as volatilities in the equity, commodity and currency markets are likely to persist in the second half of 2016."

The 88-year-old tycoon’s attempts to cut his reliance on the UK hit an obstacle on Thursday after the Australian government signaled it will block a bid by Li’s Cheung Kong Infrastructure Holdings Ltd for a local electricity distributor. The company has a week to submit a revised offer.

The Australian decision is the latest in a series of setbacks in the past few months for Hong Kong’s richest man, whose business empire sprawls across energy to infrastructure and telecommunications. A plan to merge Li’s UK business with Telefonica SA’s O2 was blocked by regulators in May, months after Hong Kong minority shareholders blocked the $12.4 billion buyout offer for his Power Assets unit.

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