[ET Net News Agency, 19 March 2021] S&P Global Ratings today said that CK Asset
Holdings Ltd. (01113) has built sufficient rating headroom to absorb its proposed
acquisition of higher ownership interest in its associated utilities businesses.
It said the company's solid cash inflows from its property and infrastructure/utilities
operations, and debt reduction in 2020 have helped it enhance its financial buffers.
S&P expects CK Asset (A/Stable/--) to maintain contracted sales of HK$45 billion-HK$49
billion in 2021, mainly supported by its strong project pipeline in China and the Borrett
Road project in Hong Kong.
The company's contracted sales, which surged to HK$48 billion in 2020 from HK$27 billion
in 2019, were higher than S&P's expectation of HK$35 billion-HK$39 billion. Resilient
residential property markets in China and Hong Kong supported the improvement.
CK Asset's rental profit in 2021 is likely to rebound to 85%-90% of its 2019 level
because concessions on retail rental could taper as Hong Kong's economy gradually recovers
from the COVID-19 fallout.
The company's operating profit contribution from property rental declined by 14% to
HK$5.9 billion in 2020. This was broadly in line with S&P's expectation, given rising
office vacancies and a slump in retail sales in Hong Kong.
S&P expects CK Asset's worst-hit businesses--of pubs, aircraft leasing, and hotels--to
recover in 2021. However, they are unlikely to make meaningful profit contributions amid
travel restrictions and social distancing measures. These businesses generated an
operating loss of about HK$2.1 billion in 2020. In contrast, profit from
infrastructure/utilities operations is likely to be stable; these businesses contributed
HK$4.5 billion profit in 2020, flat from 2019. (KL)