Hong Kong-based CK Hutchison recorded bumper profits from its ports operations as the conglomerate faces criticism from Beijing for a $22.8bn deal with US asset manager BlackRock for most of the business.
The group on Thursday reported a 24 per cent jump in earnings before interest and taxes to HK$13.1bn ($1.7bn) for its ports segment last year. It is selling 43 of its 53 ports, including two at the Panama Canal, to a BlackRock-led consortium. It will retain control of its Chinese ports.
The ports sale follows criticism by US President Donald Trump of alleged Chinese influence over the canal, a vital conduit for US trade. CK Hutchison has denied Trump’s criticism played a part in its decision to sell the ports in Panama and elsewhere.
Since striking the deal the group and its billionaire founder, Li Ka-shing, have also come under fire from Beijing. China’s top office in Hong Kong last week reposted two strongly-worded commentaries asking Li to “think twice” while describing the sale as a “spineless, grovelling” move that “sells out all Chinese people”.
The group did not mention the sale in the results announcement and did not hold an analyst briefing. It noted that ports “are often viewed by governments as critical national assets”, adding: “Regime or sentiment changes in less politically stable countries may affect port concessions granted to foreign international ports operations.”
The group’s share price in Hong Kong jumped 15 per cent in March on news that CK Hutchison would receive cash proceeds of $19bn and return some of that money to its shareholders. A definitive agreement is expected to be signed by April 2.
It is not clear how Beijing or Hong Kong authorities could stop the deal as the 43 ports included in the deal are located outside Hong Kong and China. CK Hutchison is incorporated in the Cayman Islands.
Chinese authorities including the State Administration of Market Regulation have been scrutinising the deal for potential security breaches or antitrust violations, Bloomberg reported this week.
While not confirming the report, Chinese foreign ministry spokesperson Mao Ning said China “firmly opposes” moves that undermine its interests “through economic coercion, hegemonism and bullying”.
Asked if Hong Kong could use a sweeping national security law to block the deal, Hong Kong leader John Lee said on Tuesday “any transaction must comply with the legal and regulatory requirements”.
China’s vocal opposition to the sale was “expected”, said David Blennerhassett, an analyst at Quiddity Advisors. “However I’m not aware of any legal avenue China has to agitate the transaction — unless they stomp on CK Hutchison’s Hong Kong or China’s investments [such as] ports, telecoms, real estate.”
China and Hong Kong accounted for 12 per cent of the group’s revenue last year, with Europe and the UK accounting for about 52 per cent.
Some pro-Beijing politicians in Hong Kong doubted the city would invoke the national security law to stop the deal.
“As CK Hutchison’s deal with BlackRock does not involve the sale of any ports in South China, Shenzhen or Hong Kong, I fail to see how Hong Kong’s laws can [be] invoked to affect the deal,” Regina Ip, a top adviser to Lee and a Hong Kong lawmaker, told the FT.
Trump said in his inaugural address in January: “China is operating the Panama Canal . . . and we’re taking it back.” BlackRock chief executive Larry Fink secured the Trump administration’s backing ahead of the deal’s announcement.
CK Hutchison’s overall profits for 2024 dropped 27 per cent to HK$17.1bn, missing analyst estimates, and its full-year dividend was HK$2.20 per share, lower than HK$2.53 per share in 2023.
