00:00Welcome back. You're watching The China Show. A closer look now at Hong Kong-listed C.K. Hutchison Group.
00:05It's set to enter the new year with really potentially some major changes, a series of deals pending.
00:12It could really reshape the future of the conglomerate amidst this looming generational shift.
00:17For more on the story, let's bring in our conglomerate's consumer and gaming reporter, Shirley Zhao, with a take today.
00:23So, yeah, I guess we'll start off with a year that's been and how that informs us about the potential major changes ahead.
00:30Yeah, so Lee Ka-shing and his family are planning basically three major moves for their flagship conglomerate C.K. Hutchison.
00:38So they are considering an IPO for their retail arm A.S. Watson, which is their biggest revenue contributor.
00:46And they are also considering options for their telecom businesses, including a potential listing, as well as sales and mergers in some markets.
00:57And, of course, they are planning to sell 43 ports globally, which account for the majority of their port portfolio.
01:06So if all these deals are completed, that would be quite significant because C.K. Hutchison would have already divested or spun off most of its core operations.
01:19And that could also grant the Lee family a fresh war chest to fend off global risks, as well as preparing for future opportunities.
01:30It's more than a facelift, right, if these three simultaneous deals come to fruition.
01:37Do we have a â I know some of these are fairly complicated, like the ports deal, for example, and we've covered that as well recently.
01:42But do we have a better understanding of when we might see these deals actually come to fruition?
01:50So these deals all face pretty big challenges.
01:53So, for example, the ports deal has angered Beijing because of the involvement of the U.S. investment firm BlackRock as a buyer.
02:02And President Donald Trump has come out and said that this is a U.S. win over the strategic Panama Canal because the 43 ports include two ports in Panama.
02:14So Beijing is unhappy.
02:16And C.K. Hutchison has invited a Chinese investor, China's biggest shipping company, Costco, into the buyer mix in the hope of appeasing Beijing.
02:26But talks we learned that have slowed down recently due to the complexity of the deal.
02:33And C.K. Hutchison's executives have said that it's unlikely for the deal to be completed this year.
02:39And other deals involving telecom, for example, would often require antitrust scrutiny in terms of telecom mergers in some markets.
02:48And the retail arm listing, C.K. Hutchison has actually been considering that on and off since 2013.
02:56But it still hasn't been able to do that due to market volatility and valuation issues.
03:02So it's not easy to pull this off.
03:05But we learned from people familiar with the matter that C.K. Hutchison wanted to do these deals because they want to unlock value for C.K. Hutchison's assets.
03:17If you look at C.K. Hutchison's stock, it has really been trading at a steep discount ever since 2015 when C.K. Hutchison as a company came into being.
03:29And the Li family really believes that these moves can potentially reduce the discount and lead to a completely reshuffle of returns for shareholders, which, of course, include the Li family, which owns 30 percent of C.K. Hutchison.
03:50Again, they're constantly leveling up the same as possible as small companies.
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