* Shares rise to 3-wk high
* Analysts raise price target
* Ports, retail to drive Hutchison growth (Adds comments, update stock price)
HONG KONG, March 30 (Reuters) - Shares of Hutchison Whampoa Ltd climbed 5.4 percent on Wednesday morning, its biggest percentage gain in about two months, as analysts raised their price target for the stock after the conglomerate posted forecast-beating earnings for 2010 and boosted its dividend.
Hutchison, billionaire Li Ka-shing’s flagship ports-to- telecoms company, on Tuesday posted a 47 percent rise in 2010 earnings, driven in part by a turnaround of its long-struggling 3G telecommunications arm, and strong growth in retail businesses.
“We think Hutch share price performance is likely to take its cue from operating trends of its non-3G businesses near term, until we get a better sense of its new investment/acquisition opportunities,” Bank of America Merrill Lynch said in a note to clients.
It maintained a “buy” rating on the stocks but raised its price objective by HK$2 to HK$106. Price targets for the stock have also been raised by a couple of other major investment banks, including Morgan Stanley.
Shares of Hutchison, an associate of property group Cheung Kong (Holdings) , hit a session high of HK$93.60, the highest since March 10, before easing to HK$93.00 at lunch break, up 4.7 percent. The Hang Seng Index was up 1.8 percent.
The stock had gained about 16 percent so far this year as of the midday break, outperforming a 1.7 percent gain in the benchmark Hang Seng Index .
Hutchison on Tuesday reported a net profit of HK$20.04 billion ($2.58 billion) for 2010, beating the HK$16.03 billion that analysts had forecast for 2010. It said it would book a one-off gain of $5.65 billion in 2011 from listing its port assets — Hutchison Port Holdings Trust — in Singapore earlier this month. [ID:nL3E7EP1X]
A strong business performance allowed Hutchison to lift its 2010 final dividend by 16 percent, the first increase in 10 years, to HK$1.41 per share.
“We believe this is an important step forward by the company, which has been keeping its dividend constant since 2000,” Credit Suisse said in a research report.
Hutchison Managing Director Canning Fok said on Tuesday that the third-generation (3G) telecom business, which has been losing money over the past decade, will contribute profits for the conglomerate from 2011 onward. The company also invests in retail, hotels, property, energy and infrastructure sectors around the world.
Chairman Li said he was upbeat about the group’s overall business prospect and said all existing businesses would see organic growth.
Hutchison, whose telecoms business includes 3G network operations in Britain, Italy and Australia, said its EBIT (earnings before interest and tax) from 3G hit HK$2.93 billion in 2010, the first-ever profit booked at the division, versus a loss of HK$8.92 billion in 2009.
Of the core businesses, Hutchison’s property and hotels operation posted a 40 percent increase in EBIT to HK$8.99 billion, excluding revaluation gains. EDIT of retail business rose 38 percent to HK$7.87 billion, while ports, infrastructure and energy operations rose about 10 percent.
Some analysts expect Hutchison may consider a spinoff of other businesses, such as its retail operations — which includes Watsons retail stores.
Credit Suisse said Hutchison’s retail operations would be a HK$10 billion EBIT business by 2013. “This is the ideal candidate for the next spin-off target within the group,” it said in a research report. Its price target for the stock is set at HK$110.6.
Hutchison’s retail division spans personal care, health and beauty chains, luxury perfumeries and cosmetics retailing, supermarkets, consumer electronics, electrical appliance retail chains and airport retail concessions. (Reporting by Donny Kwok; Editing by Charlie Zhu and Ken Wills)