Hutchison Whampoa plans to list Watsons in Hong Kong

October 4, 2013 Leave a comment

Hutchison Whampoa plans to list Watsons in Hong Kong: report

Staff Reporter

2013-10-03

Hutchison Whampoa — an investment holding company owned by Hong Kong tycoon Sir Li Ka-shing — plans to list its drugstore chain Watsons on the Hong Kong Stock Exchange after the sale of its ParknShop supermarket business, as the struggling supermarket chain may hurt the value of Watsons, reports the Chinese-language web portal NetEase. A market observer said Hutchison Whampoa is likely to sell ParknShop and list Watsons on the main board of the Hong Kong Stock Exchange within the next 12 to 18 months, with the initial funds raised estimated at US$8-$10 billion. A company spokesperson refused to comment on the matter, however.A source close to Hutchison Whampoa noted that Canning Fok, the company’s manager director, has dedicated himself to the retail industry in recent years. ParknShop’s profitability has dropped, which may drag down the market value of Watsons, the source said, adding that this is one of the reasons that Hutchison Whampoa is selling the grocery chain.

Fok told market analysts in August that the profitability rate of ParknShop was below 6%, which was less than Hutchison Whampoa’s overall health and beauty business in Asia at 9.3%. Meanwhile, the earnings before interest, taxes, depreciation, and amortization of Hutchison Whampoa stood at 8.56% last year.

According to reports, Hutchison Whampoa’s base price for selling ParknShop was US$3 billion, whereas the target price was US$4 billion. The market profitability of the grocery chain may be 29 to 39 times higher based on ParknShop’s net revenue of US$800 million last year, the source said.

After listing Watsons, Li plans to expand the business in China, the source added.

Filed under Macro Trends

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