21 October 2016
Despite his 86 years, Li Ka-shing is well known for his sense of timing as shown in his landmark asset restructuring that has been driving his stocks. Photos: RTHK
Despite his 86 years, Li Ka-shing is well known for his sense of timing as shown in his landmark asset restructuring that has been driving his stocks. Photos: RTHK

How Li Ka-shing made a 50% gain in five months

Li Ka-shing is the world’s 12th richest man with a fortune of US$38 billion by Bloomberg estimates and No. 21 with a US$27.6 billion net worth on the Forbes real-time list.

Let’s strip out the difference in the compilers’ treatment of his assets and the considerable gap in his wealth.

The fact is the Hong Kong tycoon, also known as Superman, is flying high. He is up at least three rungs in the rich league table from this time last year. 

Since Li announced the restructuring of his two flagship companies earlier this year, his fortune has surged more than 50 percent. 

By Bloomberg’s reckoning, he is the second richest Chinese on the planet, outstripping Jack Ma, whose blockbuster Alibaba listing in the United States last year made him a very wealthy man.

Forbes and Bloomberg list mainland property billionaire Wang Jianlin as the wealthiest Chinese with a fortune of US$39.7 billion and US$44.6 billion, respectively. 

Li’s fellow Hong Kong billionaire, Henderson Land chairman Lee Shau-kee, is 25th on the Forbes list (US$25.4 billion ) and 37th on Bloomberg (US$21 billion). 

Despite his 86 years, Li is known for his sense of timing. Most times, its spot-on as shown in his landmark asset restructuring. The changes became effective on June 3.

After the reorganization, Li has 30 percent of both Cheung Kong Property, which owns his real estate assets, and CK Hutchison, which holds assets ranging from ports, infrastructure to mobile phone networks, according to Bloomberg.

Li’s other publicly traded holdings include Hutchison Telecom Hong Kong and Cheung Kong Infrastructure and his shares are held through several holding companies and trusts.

The asset restructuring freed up key assets by removing the so-called holding company discount, a metric for valuing companies that merely hold assets and have no business activities of their own.

Hutchison shareholders have gained nearly 50 percent, assuming they have converted their holding into CKH shares.

By comparison, Sun Hung Kai Properties, Hong Kong’s largest property developer, and Henderson Land are up 13 percent and 16 percent, respectively.

The benchmark Hang Seng Index is up 17 percent and the H-share index up 18 percent.

Interestingly, the Hong Kong stock market is enjoying a rip-roaring run, with nearly 40 percent of all listed stocks surging more than 52 percent.

A total of 681 companies out of 1,714 have gained by that much since Jan. 9, according to data provider

Leading the pack is BEP International, which saw a 40-fold increase.

For perspective on the performance of Li Ka-shing’s stocks, we have to look at those two flagships before the restructuring.

If you had one share each of Cheung Kong and Hutchison Whampoa then, these would be worth a combined HK$212.40 on Jan.9 (CK at HK$125, HWL at HK$87.40).

Now you have a combined 1.68 shares of CKH Holdings (HK$118) and CK Property (HK$74) worth HK$322.50, up 51.8 percent.

If you are a Cheung Kong shareholder, your shares are worth HK$192 each today, up 53.6 percent from HK$125 on Jan. 9.

And if you are a Hutchison shareholder, your shares are worth HK$130.50, up 49.3 per cent from HK$87.40.

CKH Holdings is now a conglomerate in Li’s business empire focused on telecommunications, especially in Europe. The group is the No. 1 mobile operator in Britain.

CK Property is a pure property play that merged with former Hutchison Whampoa Properties to become the second largest property company in Hong Kong behind Sun Hung Kai.

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EJ Insight writer

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