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HK: Share outlook for Hutchison August 15, 2006

Posted by Jasper in Mobile, NGN.

[From cellular-news.com] Analysts are speculating whether this will be the year Hong Kong conglomerate Hutchison Whampoa finally gets a payoff on its $25 billion bet on 3G mobile-phone technology. Based on the scant value the markets assign Hutchison’s loss-making 3G operation, investors aren’t counting on it. But maybe there is some good news nevertheless.

Shares of Hutchison, which has ports, energy, property and retail interests, in addition to its telecom units, have fallen 2% this year to HK$72.35 (US$9.31) last Thursday. That means the stock (also trades as an ADR in New York under symbol HUWHY) is selling at a big discount to its net asset value, which Merrill Lynch estimates could be as high as HK$114.80. The discount is mainly due to the perceived drag on the company’s performance from 3G.

Merrill isn’t alone in seeing value. Mark Simpson, an analyst with Macquarie Securities (Asia), pegs Hutchison’s net asset value at HK$93 a share, which includes just HK$6 per share for its 3G operations in Britain, Italy and several smaller markets like Denmark. That’s in line with the low valuation skeptical fund managers gave Hutchison’s 3 Italia unit early this year; that was enough to force the parent to cancel the public offering of its Italian operator’s shares.

Hutchison is due to report first-half earnings on Aug. 24, and cash flows at the 3G businesses should look better now that networks have been built and costs to build 3G handsets have fallen, says Simpson.

Read the full article here



1. Telconomics » HK: Hutchison earnings up - August 25, 2006

[…] In a previous post I quoted speculations that Hutchison 3G business might at a turning point. No luck it would seem.  Yesterday Hutchison Whampoa reported a doubling of its first half earnings, but this was lifted by a one-time gain from the sale of a stake in its ports business […]

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