Release of 1Q 2010 Results

China Merchants Holdings (Pacific) Limited wishes to announce that it will release its financial results for the first quarter ended 31 March 2010 on Monday, 26 April 2010, after trading hours.

China Merchants Holdings (Pacific) reports net profit of HK$195.4 million in FY2009

Declares final dividend of 2.0 cents per share

SINGAPORE, 25 February 2010 – Mainboard listed China Merchants Holdings (Pacific) Limited (“CMHP” or the “Group”) today unveiled a net profit of HK$195.4 million for the year ended 31 December 2009, down 34% from the previous year. The decline was primarily due to an impairment charge of HK$168 million taken against the Group’s 60%-owned Yuyao Highway. Excluding the one-off impairment charge, net profit would have been HK$363.4 million, an increase of 23% over the same period a year ago.

While the performance of the Group’s two major toll road assets – the Guiliu Expressway and Guihuang Highway remained strong in 2009, Yuyao Highway’s performance was affected by traffic diversion caused by a change of road network. Its profit contribution declined sharply by 53.1% to HK$15.6 million compared to HK$33.3 million last year.

Guiliu Expressway has registered strong toll revenue growth since the implementation of a weight-based toll collection system for goods vehicles from 1 July 2009. Toll revenue and profit contribution from Guiliu Expressway increased 39.9% and 50.4% respectively.

The performance of Guihuang Highway improved after the completion of major upgrading works in July 2009. During the year under review, its traffic volume increased 28.7% and toll revenue grew 20.5% compared to the last corresponding period. However, Guihuang Highway achieved a profit growth of 5.7% in 2009 due to higher repairs and maintenance expenses.

For the year-to-date, pre-tax profit from the toll road operations declined 32% to HK$213.3 million. Excluding the impairment charge of HK$168 million, pre-tax profit from the toll road operations grew 21% to HK$381.3 million from HK$314.6 million a year ago.

The property development and others business segment as a whole posted a pre-tax loss of HK$10.1 million for the year under review compared to a loss of HK$12.3 million a year ago, led by a marked improvement in its fourth quarter results. This business segment achieved a pre-tax profit of HK$2.4 million in the fourth quarter compared to a loss of HK$26.1 million in the same period last year. The gains marked a turnaround from losses of HK$7.8 million in the first quarter, HK$4.2 million in the second quarter and HK$470,000 in the third quarter.

In accordance with the Guiliu Expressway joint venture agreement, with effect from 1 January 2010, the Group’s profit/cash sharing entitlement in the 40%-owned Guiliu Expressway will be reduced from 90% to 40% and the receipt of subsidy income will cease from the same date.

Chief Executive Officer Mr Jiang Yan Fei said, “The fundamentals of the toll road business in China remains strong. Our toll roads in China should continue to perform well in 2010. Although the operating environment in New Zealand is expected to remain uncertain, we believe the worst is over for the residential property market in New Zealand.”

Chairman Mr Dong Xue Bo said, “We have adopted a prudent approach in our pursuit of growth opportunities in the last couple of years due to the economic uncertainties. We have intensified our efforts to secure expressway projects and have stepped up the pace of negotiations with potential partners. The China Merchants Group has vast investments in the toll road industry in China, a reflection of its confidence in the industry. Currently, the China Merchants Group is streamlining its toll road assets and I believe that our Group will play an important role in this process.”

“For the current year, with the support of the China Merchants Group coupled with a solid business model and an experienced management team at the helm, I am confident that we have the financial capacity to pursue our growth strategies, while continuing to ensure an attractive return to shareholders by way of dividend payouts,” Mr Dong added.

The Group’s financial position remained strong in FY2009. It strengthened its cash position, with cash and cash equivalents at HK$1.0 billion, up 31% compared to FY2008. The toll road operations continued to generate robust cash flows. Free cash flow for the year was HK$378 million.

The Board has proposed a final dividend of 2.0 cents per share. Together with the interim dividend of 2.5 cents paid last year, this will bring the total dividend for the year to 4.5 cents a share. The Board remains committed to a payout ratio of 50% of net profit and this year’s dividend payout ratio of 79% is in line with this.

China Merchants results are out. Profits down 34% due to a one-off impairment charge brought from the Yuyao Expressway drop in fair value. Without the impairment charge, the Group's net profit would have hit a record HK$363 million.

Final dividend of 2 cents were announced.

At a glance -

1) Toll Road operations are growing with a 21% increase in pre-tax profit compared to 2008.

2) Property division has returned to profitability. The Group says the worst is over.

3) Group pays out 79% of its income as dividend. If we disregard the non-cash item (one off impairment charge), its payout ratio is only 40%. This brings a dividend yield of 7%

4) Chairman has mentioned that the parent company intends to streamline its toll road operations and CMHP will benefit from this move. Possible M&A this year.

Will study more later.