CK Hutchison Holdings (0001.HK)

Li Ka-shing to Plan Retirement by Next Year, WSJ Reports

by Prudence Ho
June 20, 2017, 12:06 PM GMT+8 Updated on June 20, 2017, 1:14 PM GMT+8

Billionaire Li Ka-shing told associates that he plans to retire by next year as chairman of his flagship CK Hutchison Holdings Ltd., the Wall Street Journal reported, citing unidentified people familiar with the matter.

Li hasn’t specified a date but is likely to step down by his 90th birthday in July next year, the newspaper reported. The tycoon plans to remain as senior adviser and keep his office atop CK Hutchison’s headquarters building in downtown Hong Kong, according to the report.

"There is no concrete timetable at this stage and Mr. Li will make his official announcement when he decides to retire," CK Hutchison said in a statement. Li, who’s in "very good" health, has discussed retirement periodically and continues to be confident in his son, Victor, to take over, it said.

More details in https://www.bloomberg.com/news/articles/...sj-reports

Li Ka-shing, Jack Ma Join Forces to Bring Digital Wallet to Hong Kong

By Prudence Ho
September 26, 2017, 10:18 PM GMT+8 Updated on September 27, 2017, 11:21 AM GMT+8

Billionaire Li Ka-shing’s CK Hutchison Holdings Ltd. and Jack Ma’s Ant Financial unit will form a joint venture to offer a digital wallet service in Hong Kong.

The wallet will come under the AlipayHK brand which was already launched in May, CK Hutchison said in a statement on Tuesday. The mobile app will allow users to make in-store payments in 4,000 retail outlets and will also offer insurance products and food and beverage vouchers.

The venture comes after the Hong Kong Monetary Authority started granting licenses to operators last year that allowed consumers to store money in local versions of online wallets. The city’s de facto central bank has granted five stored-value facilities licenses in total, with Chinese tech giant Tencent Holdings Ltd. also approved to offer digital wallets to consumers in Hong Kong.

More details in https://www.bloomberg.com/news/articles/...let-to-h-k

Li Ka-Shing's Son Stumbles in Year Since Father’s Retirement
> Canada and Australia setbacks mar Victor Li’s first year at CK
> Company takes cautious approach with Hong Kong redevelopments

By Bruce Einhorn  and Jinshan Hong
March 22, 2019, 4:00 AM GMT+7

Following in his father’s footsteps was always going to be a challenge for CK Hutchison Holdings Ltd.’s Victor Li.

Li Ka-shing, the self-made billionaire who over seven decades turned a plastic flower business into a global empire spanning ports and property to telecommunications and retailing, last March announced he would retire. He then handed the top position at the family-controlled conglomerate to his eldest son.

Twelve months later, Victor Li, 54, has learned a tough lesson about being the follow-up act to a legendary figure in Hong Kong and investors have been pretty unforgiving so far.

The stock price of the family’s flagship company, CK Hutchison, has dropped 17 percent in the year since Li Ka-shing announced his retirement. During that time, the benchmark Hang Seng Index has fallen 7.7 percent.

“Li Ka-shing has been a unique asset of the family group, which unfortunately is not transferable to the next generation,” said Joseph Fan, a Chinese University of Hong Kong professor who specializes in family-run businesses.

The elder Li, now 90, started out as a refugee and built a fortune that made him the city’s richest man, earning him a reputation among local residents as a deal maker on par with the likes of Warren Buffett.

More details in https://www.bloomberg.com/news/articles/...emium-asia

Health and beauty giant AS Watson opens 15,000th store as CK Hutchison chair Victor Li tries to emerge from father Li Ka-shing’s shadow
* The world’s largest and fastest growing international health and beauty retailer AS Watson Group opened its 15,000th store, in Kuala Lumpur, on Tuesday
* Aggressive, high-profile expansion is part of Victor Li’s efforts to stamp his authority on his chairmanship of CK Hutchison, say analysts

Lam Ka-sing  
Published: 4:30pm, 26 Mar, 2019

Founded almost two centuries ago as a simple dispensary, it is now part of the fabric of Hong Kong, selling everything from beauty products and tissues to snacks and its own brand of bottled water.

Watsons is almost as ubiquitous as 7-Eleven, with at least one shop in every neighbourhood of the city. Breakneck expansion into overseas markets has seen AS Watson Group grow into the world’s biggest and fastest growing health and beauty retailer, opening a new store on average once every seven hours across Asia and Europe.

On Tuesday it hit a milestone, opening its 15,000th store globally, in Kuala Lumpur. AS Watson’s expansion in foreign markets has become more aggressive and high-profile since Victor Li Tzar-kuoi became chairman of parent company, CK Hutchison.

The move signals the desire of Li to make his own name after taking the helm from his famous father, the Hong Kong tycoon Li Ka-shing, analysts said.

“The market has recently been watching him, comparing him with his father,” said Harris Wan, fund manager at CIS Pride Select Fund. “There is a need to be more high-profile. It is reasonable.”

The opening marks the 500th Watsons store in Malaysia, one of the fastest growing markets for health and beauty products. Watsons is the flagship retail brand of AS Watson, with over 7,200 stores in 13 markets in Asia and Eastern Europe.

More details in https://www.scmp.com/business/companies/...-hutchison

Not that price is a good indicator of value, but looking at the charts, LKS flagship co is currently at 10 year low, with PE of 6.7 & PB 0.59.

I wonder if it's because of the current situation in HK, or something else, perhaps like the article below.

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Li Ka-shing's CK Hutchison probably hid HK$58b of debt, says researcher; company denies allegations
Published May 15, 2019, 10:53 am SGT

HONG KONG (BLOOMBERG) - Billionaire Li Ka-shing's CK Hutchison Holdings "may be concealing" HK$57.7 billion (S$10 billion) of debt as a result of aggressive accounting, a Hong Kong-based researcher said on its website, allegations the company denied.

GMT Research, which uses its own proprietary accounting and corporate governance analysis system, posted the research related to accounting treatment of debt by the company and recommended avoiding the stock.

CK Hutchison "rejects any innuendo or suggestion of accounting irregularity", the company said in a statement on Tuesday (May 14), adding that the lead of the GMT report "appears selective, biased and materially misleading"....

More details : https://www.straitstimes.com/business/co...researcher

58billion is roughly the amount of the annual profit so its not so crippling I think.
I think a bigger reason for the sell down is the greater chance of a no deal brexit and the accompanying effect on gbp. Ckh has about 1/3 of profits and assets in the uk.
The trade war will also affect port operations, and they have about 10% of profits from hk, which is of course rather messy now.

(07-08-2019, 10:58 PM)dreamybear Wrote: Not that price is a good indicator of value, but looking at the charts, LKS flagship co is currently at 10 year low, with PE of 6.7 & PB 0.59.

You can't compare the prices directly, because 10 years ago this company was known as Hutchison Whampoa and held a different set of subsidiaries than today. It was intertwined with another holding company called Cheung Kong (now CK Asset Holdings) and disentangled in a complicated corporate exercise in 2015. As a result of this restructuring and acquisitions, there is a lot of Goodwill on the balance sheet. Also on the balance sheet, we find listed associate companies, valued at their marketprice which dropped or may drop later. For these reasons, we should be careful using the P/B measure.

But even with those caveats, the company does indeed look cheap. I personally find it hard to value though. It's a conglomerate, so a sum-of-the-parts calculation seems appropiate. As the news paper article already indicates, it will be difficult to account for the debts held in subsidiaries and also there may be insufficient public information about unlisted subsidiaries.

CK Hutchison is a well-run conglomerate that holds subsidiaries with moats around their business. I will keep it on my watch list and might buy the share when it's so obviously cheap  in terms of dividend yield, PEG, EV/EBITDA, etc that you don't need a precise SOTP calculation for a confident decision.

(11-08-2019, 03:12 PM)jaco Wrote: You can't compare the prices directly, because 10 years ago this company was known as Hutchison Whampoa and held a different set of subsidiaries than today. It was intertwined with another holding company called Cheung Kong (now CK Asset Holdings) and disentangled in a complicated corporate exercise in 2015. As a result of this restructuring and acquisitions, there is a lot of Goodwill on the balance sheet. Also on the balance sheet, we find listed associate companies, valued at their marketprice which dropped or may drop later. For these reasons, we should be careful using the P/B measure.

But even with those caveats, the company does indeed look cheap. I personally find it hard to value though. It's a conglomerate, so a sum-of-the-parts calculation seems appropiate. As the news paper article already indicates, it will be difficult to account for the debts held in subsidiaries and also there may be insufficient public information about unlisted subsidiaries.

CK Hutchison is a well-run conglomerate that holds subsidiaries with moats around their business. I will keep it on my watch list and might buy the share when it's so obviously cheap  in terms of dividend yield, PEG, EV/EBITDA, etc that you don't need a precise SOTP calculation for a confident decision.

Thanks very much, jaco, for the background info on CK.   

I totally agree with your views above; you have helped me solve my dilemma - I don't think I will spend further time to research/pursue this opportunity even though the price may look like a "bargain" right now. I am personally quite cautious towards investing in companies with considerable goodwill(also prefer to look at NTA than NAV).

Furthermore, as a conglomerate with various subsidaries, I just realized it's probably too much work for me to monitor its major subsidaries going forward.

Ckh has 11% earnings yield but a neg nta due to its massive goodwill from acquisition of Windtre and CKI, 323bil hkd. If we remove intangibles from its balance sheet its nta is -8.47.

A consistent price/fcf of 9x for 3 years in a row, but its ev is 2.7x its market cap. Means ev to fcf of 24.4x. Hmm

(11-08-2019, 03:12 PM)jaco Wrote: CK Hutchison is a well-run conglomerate that holds subsidiaries with moats around their business. I will keep it on my watch list and might buy the share when it's so obviously cheap  in terms of dividend yield, PEG, EV/EBITDA, etc that you don't need a precise SOTP calculation for a confident decision.

The recent market turmoil did not leave CK Hutchison unaffected and I decided to buy tuesday at 49.50 HKD per share. As stated earlier, I will not pretend that I am able to value this complicated conglomerate in all details, but as Ben Graham said: “You don’t have to know a man’s exact weight to know that he’s fat.”

The stock is quoted with a P/E around 5. This seems ridiculously low to me. Note that the E here, is not inflated by any non-recurring income. CK Hutchison had a presentation of it's FY 2019 results last week and those results were overall pretty similar to 2018.

All subsidiaries performed decent in 2019, except for Energy. This concerns the Canadian oil company Husky, which is a disaster. However, Husky is only a few percent of the overall conglomerate in any way you want to measure.

CKH's borrowings are high, but the maturities are staggered over the next 10 years. Interest and repayments seem well covered by the free cash flows. With assets such as toll roads, harbours, waste processors, water and electricity suppliers any default seems unlikely. These are also the type of assets that I expect to weather the current crisis, even if it takes longer as we expected.

I bought CK Hutchison as a cornerstone for my portfolio with the intention to hold it for the long term.

Some more background from external source:
https://valueinvestasia.com/here-is-what...dings-ltd/