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Signing off, Li Ka-shing says he's kept shareholders happy

Hong Kong tycoon hands $150bn empire to his son Victor

Hong Kong tycoon Li Ka-shing speaks to reporters as he formally retires after the company's Annual General Meeting in Hong Kong on May 10.   © Reuters

HONG KONG -- Thursday marked the end of an era for Hong Kong business as Li Ka-shing, a widely respected self-made tycoon dubbed "Superman" by many, finally stepped down as chairman and executive director of his two flagship conglomerates, CK Hutchison Holdings and CK Asset Holdings.

Li, who will be turning 90 in July, did not offer himself to be re-elected as director of the two Hong Kong listed companies at the annual shareholders' meetings held back-to-back on Thursday afternoon. He has given way to his elder son Victor Li Tzar-kuoi, 52, who will succeed the chairmanship and continue with his existing role as managing director.

"The shareholders are actually quite close with me. I'm quite touched," the elder Li said, addressing the media crew of over a hundred reporters waiting to hear from him after his final shareholders' meeting.

Speaking to a battery of microphones, he proudly claimed that "for the past 46 years, so many meetings with shareholders, but until now, no shareholder has complained about anything. I think I have done my best and have been responsible to shareholders. I have realized my mission to keep shareholders happy." CK Asset Holdings originated from Cheung Kong Holdings that listed in 1972, a name that few in the territory would not have heard of.

Li will now assume a new position as senior adviser of the two companies that will each pay him an annual salary of 5,000 Hong Kong dollars ($635), the same amount that he drew as director.

He emphasized that his successor Victor has "followed me for more than 30 years, and he should do well." Given Li's sharp business acumen that helped him amass a fortune, build conglomerates and expand the family's reach into businesses throughout the world, Victor has big shoes to fill. The oft-raised question was whether he would be able to maintain the family's fortunes and reputation without his father at the helm.

That question was posed to Victor on Wednesday and he reiterated that there would not be "any significant change" in CK Hutchison. Talking to the media then after the annual shareholders' meeting for CK Infrastructure Holdings, a major subsidiary of CK Hutchison where he is chairman, he seemed fed-up with the doubters, saying that he had already "answered this question numerous times."

The elder Li's retirement is a watershed moment for Hong Kong, as he is a leading business figure who shaped the territory's economic success after WWII. His personal success was often upheld as proof that Hong Kong was a land of opportunity. Local newspapers ran front page stories about his retirement on Thursday morning and international presses also ran stories about his astonishing rise.

Born in Chaozhou, Guangdong Province in 1928, Li and his family escaped Japanese aggression and fled to Hong Kong in 1940. He started working in his early teens after he lost his father to leukemia. His work ethic was noted and he became the president of a plastic products factory at the tender age of 19, managing about 300 workers.

In 1950, he started a business making plastic flowers and toys, coinciding with a time when Hong Kong was taking off as a regional manufacturing hub, supported by cheap immigrant labor from mainland China. Labor disputes and anti-British riots that lasted for more than half of 1967 in the former colony opened up opportunities for Li to buy up land at bargain prices. This eventually established him as a real estate tycoon, as he switched his main business to property development from manufacturing, resulting in the listing of Chueng Kong Holdings in 1972.

After a series of major acquisitions including Hutchison Whampoa, one of the four major Hong Kong-based British conglomerates, in 1979, Li became the richest man in the territory, an accolade he holds to this day and for many years in Asia. A basic calculation of the worth of 15 companies and REITs under his influence listed in Hong Kong, Singapore, Toronto and New York, showed a whopping figure of $153 billion as of Wednesday, according to QUICK-FactSet data.

Market participants widely recognize that there are no major changes on the horizon, given as the succession had been planned for years, if not a decade or more. His other son Richard Li Tzar-kai has long been pursuing a different path, centered on telecoms and internet company PCCW and financial services including insurance arm FWD.

Benjamin Lo, an analyst at Nomura based in Hong Kong, said he expects a "continued tilt towards more stable cash flow businesses, a balanced approach towards deploying its capital and free cash flows for M&A and dividends." He maintains a "buy" rating at a target price of HK$126 apiece for CK Hutchison stock, which represents an almost 40% upside to the current price.

Such a view is also shared in the credit market. Gloria Tsuen, senior analyst at Moody's Investors Service based in Hong Kong, confirmed her A2 ratings with a stable outlook after the retirement announcement saying that she saw "no impact" on CK Hutchison. The company's ratings and outlook are at par with global corporate names such as Boeing, Daimler, Honda Motor, Walt Disney and Ralph Lauren.

Tsuen said that apart from Victor's long experience under his father, those relationships with business partners, politicians and others created by Li "are institutionalized" in the family business. Talking to the Nikkei Asian Review, she stressed that "there is a structure in place."

But labor activists on the other side of the social spectrum, too, feel that change is not imminent. Stanley Ho Wai-hong, education secretary of Hong Kong Confederation of Trade Union who fought a 40-day strike on behalf of dock workers at Li's port operator in 2013, told the Nikkei Asian Review that he anticipates "no difference" after Li's retirement, as "the company is still there and the relationship with the workers will be the same." Ho feels that the company "is not willing to communicate with the union and the laborers."

The union, which has approximately 100 affiliates and 200,000 members in the territory, has been fighting for better treatment of its workers, including legislating collective bargaining rights and standard working hours, as it feels the system favors big business.

Whether Victor will introduce big changes in the long run remains to be seen. The share prices of CK Hutchison and CK Asset have dropped by 7.3% and 4.3% respectively since the announcement of the retirement on March 16, marking weaker performances than the benchmark Hang Seng Index's fall of 2.2% in the same period, perhaps an indication of some loss of confidence.

But what will Li the Hong Kong rags-to-riches icon do from tomorrow? "My major work at the [Li Ka-shing] foundation will start next month," he said. The charity that he founded in 1980 is what he considers to be his "third son." And he added: "I will go back to the office tomorrow morning, that's it."

Li Ka-shing spoke to a battery of microphones and over a hundred reporters waiting for him to speak after his final shareholders' meeting as chairman of his two flagship conglomerates. (Photo by Kenji Kawase)

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