Happyretire asked 3 months ago
Hi all, I've tried to calculate CK Infrastructure Debt Svc ratio. Using '24 data as example (HKD mil):
Int. exp: 2,841
Int. income: 48
Net op. cash flow: 1,968
Therefore, my calculated Debt svc ratio looks a little wonky. Could someone kindly advise where did I go wrong please? Thank you!!
1 Answers
Victor Chng Staff answered 3 months ago
Hi Happy Retire,
For CKI, due to the nature of its business model, the way we calculate its debt servicing ratio needs to be adjusted. For example, since the company owns multiple joint ventures, you should add dividends received from associates and joint ventures to the net operating cash flow to better reflect the true cash flow. You can refer to Note 32(c) on page 144, where they calculate the full amount of 7,416 for 2024.
As for net interest expense and income, you can refer to page 143, where the breakdown of operating cash flow is provided. Net interest expense is 865 million, while interest income is 467 million, resulting in a net interest expense of 398 million. Based on this, the debt servicing ratio for 2024 is approximately 5.4% (398 / 7,416).
As mentioned earlier, CKI’s business model is quite complex due to its multiple joint ventures and associates. As a result, the figures may change over time due to restatements whenever new data is released. That said, I would consider the current 2024 numbers to be the most accurate.
The key is to ensure that the ratio remains within a reasonable range at all times, even after any restatements.
For CKI, due to the nature of its business model, the way we calculate its debt servicing ratio needs to be adjusted. For example, since the company owns multiple joint ventures, you should add dividends received from associates and joint ventures to the net operating cash flow to better reflect the true cash flow. You can refer to Note 32(c) on page 144, where they calculate the full amount of 7,416 for 2024.
As for net interest expense and income, you can refer to page 143, where the breakdown of operating cash flow is provided. Net interest expense is 865 million, while interest income is 467 million, resulting in a net interest expense of 398 million. Based on this, the debt servicing ratio for 2024 is approximately 5.4% (398 / 7,416).
As mentioned earlier, CKI’s business model is quite complex due to its multiple joint ventures and associates. As a result, the figures may change over time due to restatements whenever new data is released. That said, I would consider the current 2024 numbers to be the most accurate.
The key is to ensure that the ratio remains within a reasonable range at all times, even after any restatements.
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