CK Hutchison's $19B Ports Deal Faces Political Scrutiny Amid Earnings Release

CK Hutchison, the Hong Kong-based conglomerate owned by billionaire Li Ka-shing, is set to release its 2024 financial results on Thursday as controversy grows over its $19 billion ports sale to a BlackRock-led consortium. The deal, which includes assets near the Panama Canal, initially boosted CK Hutchison’s shares, with investors anticipating management’s plans for reinvestment or a potential special dividend.

However, the company has unexpectedly canceled its post-earnings media and analyst conferences following criticism from Beijing. China’s Hong Kong and Macau Affairs Office has reposted state media commentaries portraying the sale as a betrayal of national interests, raising speculation about possible intervention from Chinese authorities.

The politically charged sale has drawn international attention, with former U.S. President Donald Trump praising it after previously advocating for reduced Chinese influence over the Panama Canal. CK Hutchison insists the transaction is purely commercial and unrelated to political tensions.

The deal marks a strategic shift, reducing the ports segment’s contribution to the company’s EBITDA from 15% to just 1%. Even before the sale, CK Hutchison’s infrastructure and telecom businesses were its main profit drivers. Li has steadily diversified his empire beyond Hong Kong and mainland China since the 1980s, with only 12% of CK Hutchison’s revenue now coming from these regions.

CK Hutchison is expected to report a net profit of HK$21.3 billion ($2.74 billion), down from HK$23.5 billion in 2023, according to LSEG SmartEstimate. While the ports deal remains in exclusive negotiations for 145 days, Fitch Ratings predicts slight declines in revenue and EBITDA but affirms the company’s diversified global footprint.