Hong Kong’s CTF Services Seeks to Sell US$2 Billion Road Assets in China
Early-Stage Discussions with Yuexiu Group
The infrastructure arm of Hong Kong’s billionaire Cheng family is seeking to sell a bundle of roads in mainland China worth about US$2 billion, according to people familiar with the matter. CTF Services, formerly known as NWS Holdings, is in early-stage discussions with China’s state-owned Yuexiu Group, the people said, asking not to be identified because the talks are private.
Strategic Review and Cash Raising
The potential sale is part of CTF’s strategic review of its toll road assets to raise cash, boost value for investors, and focus on developing businesses with faster growth potential, they said. Discussions are still at an early stage, and the valuation could still change depending on the finalized assets and deal structure, the people said.
Background on CTF
CTF is one of the Cheng family’s three listed flagships, along with New World Development and Chow Tai Fook Jewellery Group. The company has been accelerating its disposals of non-core assets in recent years as it seeks to devote more resources on growth sectors, including insurance and logistics. CTF is a key cash cow for the Cheng clan, providing stability at a time when its sister company New World Development is struggling with losses and mounting debt.
Recent Developments
CTF’s stock prices have risen 5.8% this year, compared to a 58% drop of New World and a 42% slump of Chow Tai Fook Jewellery. To boost liquidity and shore up investor confidence, New World sold control of CTF to the Cheng family’s private investment arm Chow Tai Fook Enterprises in mid-2024.
Current Holdings and Operations
CTF currently has holdings in 15 road operations across mainland China, including in major cities such as Guangzhou, Shenzhen, and Hangzhou. It also operates major commercial projects in Hong Kong, including the landmark Convention and Exhibition Center.
Financial Performance
The company’s profit rose 44% for the financial year ended June, mainly driven by growth in the insurance business, its commercial projects turning profit from loss, and stable performance in the roads and logistics segment.
Succession Saga
The performances of the Cheng family’s companies have become the centre of investor attention as a succession saga unfolds. Adrian, the family patriarch Henry Cheng’s eldest son, was once widely viewed as the strongest candidate to take over from his father. However, that changed after the elder Cheng said in a TV interview in 2023 that he’s still looking for a successor. Adrian stepped down as the chief executive officer for New World in late September after the company incurred its first annual loss in two decades and racked up more debt than its major developer peers in Hong Kong.
FAQs
Q: What is the value of the road assets being sold?
A: The road assets are worth about US$2 billion.
Q: Who is CTF Services discussing the sale with?
A: CTF is in early-stage discussions with China’s state-owned Yuexiu Group.
Q: Why is CTF selling its road assets?
A: CTF is selling its road assets to raise cash, boost value for investors, and focus on developing businesses with faster growth potential.
Q: What is the current financial performance of CTF?
A: CTF’s profit rose 44% for the financial year ended June, mainly driven by growth in the insurance business, its commercial projects turning profit from loss, and stable performance in the roads and logistics segment.
