Hutchison Whampoa, the sprawling conglomerate of tycoon Li Ka-shing, sees seven fat-cow years ahead.
That’s from his long-time lieutenant, Canning Fok, who has been in the taipan chair of Hutchison Whampoa for nearly 21 years.
In a rare interview with The Economist last month, Fok made reference to the biblical “lean-cow years” which he described as a period in the 2000s when Hutchison launched a disastrous 3G business in Europe.
The business hit a low point in 2004 and 2005 when Hutchison did not have enough cash flow to offset its 3G losses. Net debt peaked at 38 percent of net capital.
Looking back, Fok said he is proud Hutchison survived without a cash call or dividend cut.
Now the seven fat years are in sight, with the phone business breaking even. Hutchison has been cashing out of ports and property, and in March, it sold a 24.9 percent stake in its personal health business, AS Watson, for HK$44 billion (US$5.67 billion).
Hutchison has been outperforming the Hang Seng index, with its share price up 4.3 percent year to date. It made a special dividend payout of HK$7 per share.
However, the stock is still down about 20 per cent from its March 2000 peak of HK$152 after adjusting for bonus shares.
Also, Hutchison has been underperforming its parent, Cheung Kong (Holdings), which has produced a 20 per cent return this yea.
Fok has been consistently the highest paid blue-chip executive, taking home some HK$188 million last year. He also owns 6.01 million Hutchison shares.
He prefers to stay out of the limelight but today he couldn’t help being in the media glare after he was reported to have offered a 3,954 square foot rental unit in Chung Hum Kok for HK$250,000 a month, down more than 16 percent from his asking price last year.
Under Fok’s management, Hutchison has become the eight largest Hong Kong-listed stock with a market value of HK$443 billion, just behind Sands China but ahead of Standard Chartered.
He gave little hint as to what Hutchison might do with its large cash pile, merely saying the core business has a lot of mileage. Hutchison won’t go into the internet business, finance or manufacturing and will only expand into China “with great care” because of intensifying market competition.
Fok should know not to get carried away by all these exciting developments in the mainland. His longstanding philosophy: Never let emotions play any part in business decisions.
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