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CK Hutchison ( CKHUF ) net profit seen at HK$21.3 billion - LSEG

SmartEstimate

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CK Hutchison ( CKHUF ) cancels post-earnings conferences amid

Beijing

ports sale criticism

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Deal seen as betrayal, state media says

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Ports sale would reduce earnings contribution to 1% from

15%

By Clare Jim

HONG KONG, March 20 (Reuters) - CK Hutchison ( CKHUF )

is set to release its 2024 financial results on Thursday with

one of Hong Kong's most powerful conglomerates increasingly

embroiled in a political row over the sale of its ports business

to a BlackRock ( BLK )-led consortium.

The telecoms-to-retail conglomerate, owned by billionaire Li

Ka-shing, said this month it had agreed to sell most of its

global ports business, including assets near the strategically

important Panama Canal, in a deal that would garner the firm

more than $19 billion in cash.

Its shares initially rallied after the deal, with investors

cheering the high purchase price. They had expected management

would give indications at Thursday's earnings conferences about

how it would reinvest the proceeds and whether it would pay a

special dividend.

The company has, however, cancelled its post-earnings media

and analyst conferences in a rare move following criticism over

the deal from the government in Beijing.

China's Hong Kong and Macau Affairs Office has reposted two

state media commentaries depicting the deal as a betrayal of

China and contrary to its national interests, fuelling

speculation as to whether China could take steps to try to

scupper the sale.

The deal has become highly politicised, with U.S. President

Donald Trump hailing it after previously calling for the Panama

Canal to be removed from what he says is Chinese control.

CK Hutchison ( CKHUF ) has said the deal is "purely commercial in

nature and wholly unrelated to recent political news reports

concerning the Panama Ports".

Analysts have said the deal would represent a significant

strategy shift because it would leave ports contributing only

about 1% of the conglomerate's earnings before interest, tax,

depreciation and amortisation (EBITA), down from 15%.

Even before the sale, CK Hutchison's ( CKHUF ) infrastructure and

telecom businesses contributed the most to the group's profit,

despite it being the world's largest privately owned port

operator.

Li has been diversifying his business outside of Hong Kong

and mainland China since the 1980s and now only about 12% of CK

Hutchison's ( CKHUF ) revenue is from Hong Kong and China, with the

remainder from Europe, the rest of Asia Pacific and Canada.

CK Hutchison ( CKHUF ) is forecast to report a net profit of HK$21.3

billion ($2.74 billion), according to LSEG SmartEstimate, down

from HK$23.5 billion a year ago.

The ports deal is not yet final as the agreement is for

negotiations on an exclusive basis for 145 days.

If it materialises, ratings agency Fitch expects CK

Hutchison's ( CKHUF ) revenue, EBITDA levels and margins will decrease

slightly, but said its business lines and geographic

contributions will remain well-diversified.

($1 = 7.7702 Hong Kong dollars)

(Reporting by Clare Jim; Editing by Anne Marie Roantree and

Lincoln Feast.)