Open-source intelligence (OSINT)
🔻 IMPORTANT - Trump 2.0
▪️Politically, the Panama Canal controversy is very interesting for Hong Kong simply because it clearly marks the change of tones in the multilateral relations among the top Hong Kong oligarch, HKSARG, PRCCG, and the US. Whether the US stands aligned with the HK oligarchy against China, or it continues its ‘all-round’ approach to political and economic players in HK to help CK in the reversed way? In this case, the Panama issue can either weaken the strength of the HK oligarchy or politically unite CK and the CCP against the US. Thus, it should be carefully observed and treated with. At present, Hutchison Ports, as part of CK, the Li Ka-shing empire, the strongest local oligarch, enjoys its independence. Although their entire revenue is declining, their main port business is now more dependent on “Asia, Australia, and others”, not the mainland China and other Hong Kong segments at all, in contrast to the mainstream narrative. In other words, the Panama issue is a vital issue for CK. Moreover, FMPRC’s below statement can be taken simply as:
Mao Ning (1/22/2025) emphasised that China has not participated in the management and operation of the Canal and has never interfered in the affairs of the Canal and has always respected Panama's sovereignty over the Canal and recognised the Canal as a permanently neutral international waterway.
It’s literally controlled by CK via Panama Ports Company. There is no reason that the anti-Communist oligarch of Hong Kong suddenly became a CCP company. However, the key entity on the Panama issue is Panama itself. Originally, two ports—Balboa, the Pacific-side port of the Panama Canal, and Cristóbal, the Atlantic entrance of the Panama Canal—should have been directly managed by their state; it should not have been outsourced to any other multinational corporations. This time, as a result of the Rubio-Mulino meeting, Panama accurately takes a neutral position to avoid any US sanctions and military actions and reduces or cancels CK dominance on the infrastructure. This is politically an accurate decision made by Panama.
In conclusion, the Panama controversy can contribute to the decline of the oligarchy of Hong Kong. Furthermore, FMPRC’s official rhetoric can be maintained to protect China’s international image if the Panamanian government actively makes political adjustments to mitigate the US impacts.
The negative rhetorical impact of the Panama issue for Hong Kong is the superficial equalisation of CK and the CCP if it’s blindly taken as a political fact, yet its positive impact is a contribution to the decline of the oligarchy. The latter is the most important outcome of the issue for Hong Kong citizens. POTUS versus two-faced CK has nothing bad for Hong Kong. On the contrary, it should be encouraged if the US really ‘helps’ HK to liberate this city from oligarchy. The Panama issue is a surprise gift from Trump 2.0 for HK people to some extent.
“China is running the Panama Canal, and we didn't originally hand it over to China. We handed it over to Panama, and now we're going to take it back.” As soon as US President Trump took office (1/20/2025), the Panamanian government immediately sent staff to review the Li Ka-shing “CK Hutchison Group” subsidiary “Panama Ports Company” (PPC) to conduct a comprehensive investigation into whether the renewal process in 2021 had damaged Panama's national interests. As a representative of Hong Kong's giant capital, Li Ka-shing's international business reputation has been tarnished. Reference is made to the public hearing conducted by the US Congress in 1999 on the concession rights of PPC to operate two major ports. The final conclusion was that, given Hong Kong's unique status under the “one country, two systems” principle, “although the company has indeed established business joint ventures with Chinese companies, these appear to be merely commercial relationships and do not give any say in the operations of the Hutchison Group or its subsidiaries”. “There is no evidence to suggest that the “Hutchison Group” is a front for the government of the People's Republic of China.” (a)
The canal, built by the United States, is required to be permanently neutral under the 1999 agreement that transferred the canal to Panama. The US State Department issued a statement saying that Rubio had made it clear that the current situation was unacceptable and that if no immediate changes were made, the US would take the necessary measures to protect its rights under the treaty. After the meeting, José Raúl Mulino Quintero told reporters that Rubio did not really threaten to take back the Panama Canal or use force. Mulino also revealed that Panama will not renew the agreement with China when the Belt and Road cooperation agreement expires.
During the talks between Rubio and Mulino, about 200 people demonstrated in the capital Panama City. They held the Panamanian flag and shouted for Rubio to get out of Panama. After some were stopped by riot police near the presidential palace, they burned banners with the portraits of Rubio and US President Donald Trump. (b)
Hutchison Port Holdings Limited (Hutchison Ports) is the ports and related services division of CK Hutchison. Hutchison Ports is the world’s leading port investor, developer and operator. The Hutchison Ports network of port operations comprises 53 ports spanning 24 countries throughout Asia, the Middle East, Africa, Europe, the Americas and Australasia.
The history of Hutchison Ports began in 1866 when the Hongkong and Whampoa Dock Company was established in Hong Kong as Registered Company Number One. For over 100 years, it provided ship construction and repair services before diversifying into cargo and container handling operations in 1969 when its flagship operation HIT, was established. In 1994, Hutchison Ports was founded to manage the growing international port network.
Over the years, Hutchison Ports has expanded internationally into other logistics and transportation-related businesses. These include cruise ship terminals, distribution centres, rail services, and ship repair facilities. In 2023, Hutchison Ports handled a combined throughput of 82.1 million TEU. (c)
This division is the world’s leading port network and has interests in 53 ports comprising 293 operational berths in 24 countries.
In reported currency, EBITDA decreased 14% to HK$13,628 million and EBIT decreased 18% to HK$9,328 million against 2022. In local currencies, EBITDA and EBIT decreased 14% and 19% respectively, primarily due to lower contribution from the associated company in the container shipping line business, together with lower storage income across most regions in Europe, HPH Trust, Mainland China and Other Hong Kong segment, as well as adverse performances in Europe and HPH Trust from reduced throughput as aforementioned, partly offset by Asia, Australia and Others region where Mexico has achieved robust performances and rebound of cargo demand in Pakistan. (P.4)
The Mainland China and other Hong Kong segment’s revenue, EBITDA and EBIT decline were mainly attributable to lower storage income, particularly in Shanghai, where exceptionally high base level were no longer sustained after the pandemic, together with lower contribution from Huizhou Quanwan Port Development following division’s disposal of its entire 50% interest in January 2023, partly offset by higher throughput in Shanghai from a low base volume in last year. The overall throughput level remained stable compared to 2022 despite subdued cargo demand at other port terminals, which was more than offset by increased volume in Shanghai. (P.5)
Asia, Australia and Others’ total revenue, EBITDA and EBIT grew by 3%, 7% and 10% respectively in reported currency and increased 1%, 7% and 10% in local currencies respectively, mainly driven by favourable outcomes in Mexico and Pakistan due to higher storage income and increased import laden containers as aforementioned, as well as throughput growth from ports in Klang and Pakistan, certain Middle East ports (Oman and Ajman) and Panama, partly offset by weak performances from Australia and Freeport in Bahamas due to decline in cargo demand and diverted transhipment volume respectively, together with loss of contribution from concession expiry in Tanzania since 2023. (P.6) (d)
Notes:
EBITDA and EBIT are both financial metrics used to evaluate a company's operating performance, but they differ in what they include and exclude.
EBIT (Earnings Before Interest and Taxes): EBIT represents a company's operating income before accounting for interest expenses and income taxes. It measures a company's profitability from its core operations, excluding the effects of capital structure (debt) and tax environments.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): EBITDA goes a step further by excluding depreciation and amortization in addition to interest and taxes. It provides a clearer view of a company's operating cash flow and profitability by removing non-cash expenses (depreciation and amortization) and the effects of financing and tax structures.
Key Differences
- EBIT includes depreciation and amortization as part of operating expenses, while EBITDA excludes them.
- EBITDA is often used to compare companies across industries or assess cash flow potential, as it removes the impact of non-cash expenses and capital expenditures.
- EBIT is more closely tied to operating income and is often used to evaluate operational efficiency.
When to Use
- Use EBIT to assess profitability from core operations, including the impact of capital investments (depreciation/amortization).
- Use EBITDA to focus on cash flow generation and compare companies with different capital structures or depreciation policies.
TFE: The twenty-foot equivalent unit is a general unit of cargo capacity, often used for container ships and container ports. It is based on the volume of a 20-foot-long intermodal container, a standard-sized metal box that can be easily transferred between different modes of transportation, such as ships, trains, and trucks.
References:
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