Li Ka-shing’s CK Hutchison, CK Asset see first-half earnings plunge as high interest rates weigh on businesses
- CK Hutchison, with businesses spanning ports and infrastructure to supermarkets, said net profits plunged 41 per cent to HK$11.2 billion
- Property developer CK Asset said its profits in the six-month period fell 18.9 per cent to HK$10.3 billion
CK Hutchison, the conglomerate with businesses spanning ports and infrastructure to telecommunications and supermarkets, said net profits plunged 41 per cent to HK$11.2 billion (US$1.43 billion).
Revenue generated from property sales plummeted 60 per cent to HK$8.25 billion, with Hong Kong generating around half of this.
“For the rest of the year, economic conditions are expected to remain challenging with downside risks of higher or more sustained inflation as well as lower growth,” said Victor Li Tzar-kuoi, Li Ka-shing’s elder son and chairman of both companies, in a filing from CK Hutchison to the Hong Kong stock exchange on Thursday afternoon.
“Consumer and business confidence in particular may continue to soften as the longer term effects of higher interest rates and more constrained credit environments weigh on sentiment.”
CK Hutchison’s revenues fell 3 per cent to HK$223.9 billion. Its ports and containers business fell 12 per cent, on the back of “stagnant global demand for consumer goods and the accumulation of inventory in the US and Europe in late 2022.”
Shares of both companies fell ahead of the announcement. Shares of CK Hutchison dropped 1.4 per cent to HK$46.30, while CK Asset declined 1.5 per cent to HK$43.05.
In a filing by CK Asset, Li cited a backdrop of global economic uncertainties and rising interest rates as the two major contributors to the developer’s poor performance.
“The overall property market conditions in Hong Kong were challenging during the period under review despite some improvements in the first quarter,” said Li.
He said the company is confident that underlying demand and purchasing power will support the property market in the long term.
“Housing policies and interest rate movements will continue to be determining factors,” he added.
CK Asset also released the price list for its new The Coast Line II residential project in Yau Tong on Thursday.
The first price list offered discounts of up to 19 per cent as the developer tries to entice buyers in the flagging market.
The cheapest flat in the list is a 210 square-foot studio being offered for HK$2.9 million, or HK$13,810 per sq ft, after an 18 per cent discount.
The discounted selling price of the units range between HK$2.9 million and HK$11.14 million, translating to an average price of HK$15,000 per square foot.
Another development launched in the same district last year, Chill Residence, was selling at an average price of HK$17,938 per square foot.
Hong Kong’s primary market has cooled as rising interest rates weighed weighed on buyer sentiment. Two new project launches – La Montague in Wong Chuk Hang and High Park I in Yuen Long recently received a lukewarm response.