By k on August 14, 2009

Hong Kong, August 14, 2009 -- Moody's Investors Service has said today
that Hutchison Whampoa Ltd's ("HWL") interim results for 2009 and the
announcement of the sale of Partner Communications Ltd ("Partner") in
Israel have not had any immediate impact on its A3 ratings. The rating
outlook remains negative.

"HWL's consolidated operating performance was fairly weak, reflecting the
deterioration in performances for many of its businesses and, to a
certain extent, the impact of foreign exchange movements," says Elizabeth
Allen, a Moody's Vice President/Senior Credit Officer, adding, "Such
deterioration in its profitability and weak credit metrics, however, were
anticipated when we changed the outlook to negative in April."

Moody's notes that Hutchison's established businesses EBITDA declined
compared to both the first and second half of 2008, mostly as a result of
declines at its port business and Husky Energy Inc. Whilst these declines
were expected, the decline at the port business was larger than
anticipated. Partly offsetting this was improvements in retail and
property businesses compared to the first half of 2008. 

The 3 Group's performance continues to challenge the group's overall
credit profile. Although EBITDA has improved (after all customer
acquisition costs), management's previous expectation of EBIT breakeven
for FY2009 appears to have been very optimistic. It nonetheless expects
losses to narrow further in 2H2009. Free cash flow of the 3 Group remains
negative, although the deficit has narrowed substantially.

Overall, consolidated revenue and EBIT has deteriorated significantly by
about 20% and 40% respectively after translation to Hong Kong dollars --
the biggest drop in many years. In fact, in local currency terms, they
fell by 7% and 37%. However, with economic conditions stabilizing and
trade improving, Moody's expects that the first half results represent a
nadir for Hutchison, absent an unexpected further lurch downwards in the
global macro-environment. 

As a result of its weak operating performance, HWL's credit ratios remain
modest for its current rating and are the key driver of the negative
outlook. Unadjusted net debt/net capital ratio of 35% and unadjusted
annualized Funds from Operations ("FFO")/net debt of about 14% for 1H2009
were similar to that for FY2008 on a restated basis. FFO now includes
customer acquisitions costs for contract customers, but which were
previously capitalized and reflected as an investment outflow. On the
other hand, HWL benefits from the lower cost of debt, such that
unadjusted FFO interest coverage improved from 2.2x to 3.3x.

HWL's liquidity profile remains strong with cash reserves of HKD71bn
against debt of HKD44bn due in the next 18 months. In its assessment,
Moody's excludes equity holdings from cash. 

Outside of deleveraging efforts, Moody's expects to see moderately
improving credit ratios in 2H2009 as a result of a better operating
performance, given improving macro-trends and seasonal-related upswing.
However, it remains uncertain whether these metrics will rebound to a
level more commensurate with the rating and is likely to depend in part
on asset sales and other initiatives to reduce leverage. Moody's notes in
this context HWL's stated intention to deleverage, and its target to
reduce reported net debt/net capital to under 30% via cost controls,
reductions in capital expenditure, and other strategic transactions.
Moody's also notes that HWL has a track record of asset sales being
implemented as and when felt necessary. 

The recent announcement by Hutchison Telecommunications International Ltd
("HTIL"), a subsidiary of HWL, to sell its entire stake in Partner for
about HKD10.7bn has helped this deleveraging effort. While HTIL's results
are fully consolidated into HWL's, Moody's notes that should the full
amount of the proceeds be distributed as dividends, then HWL's pro-rata
share would be about HKD6.5bn, which is helpful but not decisive in the
context of HWL's asset base or debt level.

The negative outlook reflects HWL's weakened credit metrics since FY2008.
Despite management's commitment to deleverage, the outlook incorporates
uncertainty over the timing and magnitude of deleveraging in the near
term. It also reflects the difficulties facing Hutchison's primary
operating divisions in an economic environment that Moody's expects to
only gradually improve in the coming 12 months. 

The rating outlook could revert to stable if HWL's financial profile
improves, such that FFO/net debt reaches 30% or above on a sustainable
basis.

On the other hand, the rating could be downgraded if HWL's FFO/net debt
does not improve and remains significantly below 30% and FFO/interest
coverage falls below 3.5x; 2) income stability from its established
businesses is disrupted, with recurring annual EBITDA falling below
HKD25bn to HKD30bn; 3) cash drain on 3G increases materially; and/or 4)
large debt-funded acquisitions occur in its established or 3G businesses. 

Moody's will take further rating action if it believes Hutchison cannot
meet the above targets as the economic cycle recovers. 

Moody's last rating action on HWL was taken on 6 April 2009, when an A3
rating was assigned to its USD1.5bn 10-year notes. The rating outlook was
negative.

The principal approach applied in rating HWL is the Special Comment -
Analytical Considerations in Assessing Conglomerates, published in
September 2007, which can be found at www.moodys.com in the Credit Policy
& Methodologies directory, in the Rating Methodologies subdirectory.

Other methodologies and factors that may have been considered in the
process of rating HWL can also be found in the Credit Policy &
Methodologies directory.

Hutchison Whampoa Ltd ("HWL") is a Hong Kong-based conglomerate with a
strong presence in Asia and Europe. Its 5 core businesses are in the
following sectors: (1) ports and related services; (2) property and
hotels; (3) retail; (4) telecommunications; and (5) energy,
infrastructure, finance & investments and others.

HWL is approximately 49.97% owned by Cheung Kong (Holdings) Ltd ("CKH").
Around 40% of CKH is in turn owned by the family trusts of Mr. Li
Ka-shing.

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