Changhe reorganizes and establishes telecommunications flagship. Changhe Network will become the fourth largest tower company in Europe

Changhe (0001) announced its interim results yesterday, disclosed restructuring in the financial report, and established a new wholly-owned holding company, CK Hutchison Telecom, to hold 8 markets in Europe and Hong Kong

And plans to split the tower assets into another company, CK Hutchison Networks, which will be the fourth largest tower company in Europe.

In the earnings report, Changhe Chairman Li Zeju said that in July, the Group established a new wholly-owned telecommunications holding company to integrate the Group’s European operations and Hewlett-Packard Hong Kong into a holding entity to provide a diversified telecommunications asset platform in eight regions. Changhe Telecom will refinance all existing external debts of Wind Tre approximately 10 billion euros and expects to receive independent investment ratings from all three credit rating agencies.

Telecommunications infrastructure assets or spin-off

At the same time, Changhe Telecom will also establish a new telecommunications infrastructure company, Changhe Network, which will pool the assets of 28,500 telecommunications stations in a wholly-owned subsidiary of Changhe Telecom. The new organizational structure and refinancing arrangements will enable the Group to save significant financing costs from 2020 and streamline its investments under the expected demand for coordinating networks, IT platforms and infrastructure to cater for future opportunities. Changhe currently has 9,300 towers and base stations in Asia.

At the analyst meeting, someone asked if this would pave the way for the spin-off? Li Zeju denied that it was clearly “not (NO!)”, but Lu Falan, the financial director and deputy managing director, added that there is no spin-off plan at present, but the spin-off can give the group great flexibility and help the group to deploy future strategies and financing needs. . Chang and Managing Director Huo Jianning joked that the restructuring is good news, “should be reflected in the stock price performance tomorrow.” Changhe shares closed at 72.5 yuan yesterday, down 1.561%.

Net profit of the first half of the year is 18.3 billion

Changhe announced its results yesterday. As of the end of June this year, according to the IFRS 16 basis, the net profit was 18.324 billion yuan, up 1.7% year-on-year, in line with expectations. It rose by 7% in local currency, with earnings per share of 4.75 yuan, and interim dividend of 0.87. Yuan, the same as the same period of the previous year, did not increase the dividend for the first time after Changhe’s restructuring in 2015. Huo Jianning, who stressed that there was double-digit growth in interim rates in the interim period last year, said that this is not a full-year dividend distribution guideline, and the final interest rate will be determined according to the operating conditions. The total EBITDA during the period was 65.589 billion yuan, up 19% year-on-year.

Li Zeju said in the financial report that the fluctuations in currency and commodity prices since the second half of last year have weakened the Group’s profit in the first half of the year. The major currencies such as the pound, the euro and the renminbi depreciated by about 6% compared with the first half of last year. In the currency exchange factor, the Group maintained stable earnings growth and sound financial position.

During the period, the Group’s revenue was 217.06 billion yuan, down 3% year-on-year. In terms of ports and related services, the total amount of revenue was 17.55 billion yuan in the reporting currency, which was similar to the same period last year. EBITDA and EBIT were $6.45 billion and $4.25 billion respectively, representing a 4% and 10% increase in reporting currency compared to the same period last year. In the retail business, the reported total revenue was reported to be 83.161 billion yuan, a decrease of 1% over the same period last year.

The revenue, EBITDA and EBIT of the Group 3 were 43.464 billion yuan, 16.297 billion yuan and 9.97 billion yuan respectively, up 20%, 27% and 33% respectively year-on-year. The Group’s reported earnings, EBITDA and EBIT were 4.325 billion yuan, 724 million yuan and 216 million yuan respectively, an increase of 6%, 109% and 213% respectively over the same period last year.

Hong Kong’s revenue only accounts for 3% of the group

Huo Jianning said at the Interim Results Analyst meeting that only 3% of Changhe’s current income comes from Hong Kong, which accounts for 1% of the Group’s overall operating profit (EBIT). He also said that the long-term port business “has growth when it is good, and it is stable when it is bad”, but Hong Kong is in a bad situation in the first half of the year, but the company has only 30% interest.

The global economic growth is slowing down and the Hong Kong economy is inevitably affected. I believe that the economic cooperation of the “One Belt, One Road” and the development of the Greater Bay Area are expected to create more business opportunities for Hong Kong.


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