2019 was a pretty challenging year by all standards. Being listed in Hong Kong, investors were concern about the impact of Hong Kong Riots on results. Since they have enough assets in Europe, a region which many believe is declining, they were concern about how Brexit impacts them. The declining in Euro and GBP, trade war between the United States vs China and Europe and also in recent times, it is Covid-19 and the plunge in oil prices will impact them.
In terms of investments, CK Hutchison (0001.HK…) will probably go down as one of my poorer investments.
I got it at $85.90, $87.65, $81.25, $80.60, $82.90, $76.40, $67.90, $55.45. Based on cost, this is one of my largest position. It may go down as one of my biggest mistakes.
CK Hutchison or CKH for short is the listed flagship company of Li Kar Shing. In 2018, he step down from the company, handing the reins over to his eldest son Victor Li.
Victor Li manages CKH together with the best-paid employee in Hong Kong Canning Fok and Frank SIXT.
CKH this week together with their sister companies CKI, CKA, and Power Assets announced their full-year results.
In terms of key metrics this is how it lines up:
- Share price: HK$49.60
- Total outstanding shares: 3.8 billion
- Total market capitalisation: HK$188.5 billion
- Enterprise Value: HK$395.5 billion
- Net earnings attributable to shareholders: HK$39.9 billion (2018: HK$39 billion)
- Free cash flow: HK$35.7 billion (2018: HK$24.7 billion)
- Earnings Yield: 21%
- FCF Yield: 18.9%
- Dividend per Share: HK$3.17 (2018: HK$3.17)
- Prevailing dividend yield: 6.39%
- Dividend Payout Ratio: 30%
- Net Debt to Asset: 19.3%
- EV/EBITDA: 3.53 times
- Price / Equity (net of non-controlling interests): 0.40 times.
Why a Post on CKH Matters
On paper, you do not wish to hear me talk about one of possibly my big investment failures. But I thought the results are applicable in the context of what we are going through today.
CKH operations happens to be global:
- Ports in China, Hong Kong, Belgium, Germany, the Netherlands, UK, Spain, Poland, Sweden, Malaysia, Indonesia, South Korea, Thailand, Pakistan, Thailand, Australia, Egypt, Oman, UAE
- Retail Beauty & Health stores through AS Watson, ParknShop, Rossman, Drogas in Albania, Belgium, Czech, Germany, HK, Hungary, Indonesia, Ireland, Latvia, Macau, Malaysia, the Netherlands, Poland, Russia, Singapore, Taiwan, Thailand, UK, Vietnam
- Infrastructure through CKI in Australia, Canada, Germany, Hong Kong, Mainland China, The Netherlands, New Zealand, UK, Portugal.
- Energy in Canada through Husky Oil
- Telecommunications in the UK, Italy, Sweden, Denmark, Austria, Ireland, CKH Networks, Indonesia,
2019 is a pretty challenging year by all standards. Being listed in Hong Kong, investors were concern about the impact of Hong Kong Riots on results. Since they have enough assets in Europe, a region which many believe is declining, they were concern about how Brexit impacts them. The declining Euro and GBP is a concern as well. As they are tapped into so many areas of world trade, investors were concerned about how the trade war between the United States vs China and Europe will impact them.
In recent times, it is Covid-19 and the plunge in oil prices.
There is definitely no escape for CKH. They tried to pillage the world. Now the world will royally fxxk them.
In the results update, we can learn more about how well they navigate these challenging times and how Covid-19 and the oil crisis have been for them.
Here we go.