18 February 2019
Li Ka-shing, with his son Victor Li Tzar-kuoi, has done many important deals in the Year of the Sheep. Photo: HKEJ
Li Ka-shing, with his son Victor Li Tzar-kuoi, has done many important deals in the Year of the Sheep. Photo: HKEJ

CKH, the stock of the Year of the Sheep

It was the biggest corporate deal in Hong Kong in the past 36 years.

When Cheung Kong (Holdings) Ltd. (00001.HK) bought a substantial stake in Hutchison Whampoa (00013.HK) on Sept. 25, 1979, it sealed the status of Li Ka-shing as the richest Chinese tycoon, a title he has not surrendered for any meaningful amount of time since.

This week, his two flagship firms will ask their shareholders to vote for the offer by Cheung Kong to take Hutchison private and complete in the Year of Sheep a journey that started in the Year of Sheep.

Why has a tycoon born in the Year of the Dragon done many of his important deals in the Year of the Sheep?

Consider 1991, the Year of the Sheep following the one in which Li bought his stake in Hutchison.

It was the year Hutchison began to speed up its expansion overseas, first taking over the Port of Felixstowe in Britain, its first step into the European container terminal market. Later that year, Hutchison and Li himself made their first foray into oil by bailing out Husky Energy in Canada.

Fast forward to the next Year of the Sheep, in which Hutchison launched the world’s first 3G service in Italy on the auspicious date of March 3, 2003, later expanding it to Britain.

In the new Year of the Sheep, Hutchison’s Three subsidiary in Britain is in talks to buy bigger rival O2 in a US$15 billion deal that would make Hutchison the largest mobile operator in Britain.

The word on the street is that Hutchison’s 3 Italia unit could take over Wind Telecomunicazioni SpA in a deal that would reduce the number of players in the Italian market to three.

The momentum is so strong that it is as if the script for the year has already been written.

Hutchison will be the stock to watch in 2015, with the restructuring and its acquisitions in the telecom sector taking centre stage.

Cheung Kong, the No. 1 stock in Hong Kong, will be renamed CKH Holdings, with most of its major assets overseas, while the real estate assets of Cheung Kong and Hutchison will be grouped together as a spin-off, CK Property.

It will go down as a big year for Li, who turns 87 this year, and probably the most aggressive year in his business career.

Interestingly, the Dragon and the Sheep are not particularly compatible.

In fact, despite market expectations for a peaceful and restful Year of the Sheep, Dragons could have a tough time, as some casual research online shows gossip will be a constant threat, so Dragons need to be discreet and alert.

Don’t start new ventures, fortune tellers warn, because there greater financial fluctuations are in store.

While this may be true, the richest man in Asia would not have made his fortune if he did not know how to separate the sheep from the goats, and do things against the odds that normal people wouldn’t dare do.

Wish him luck!

Hutchison ended the Year of the Horse at HK$104.70, while Cheung Kong closed at HK$152.

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EJ Insight writer

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