UBS says with 3G operations on edge of cashflow and EBIT breakeven in 2010-11, the financial profile of Hutchison Whampoa (OTC: HUWHY.PK, Germany: HUWA.F, HUWA.BE, HUWA.MU, Hong Kong Stock Code: 0013)  is “normalizing,” allowing investors to assess company on basis of vast portfolio of international assets without perception conglomerate’s capital allocation “is perennially held hostage to the cash burn of 3G.” The house also says for the past decade, Hutchison struggled to generate large recurring net profit, but that now changing for better: forecasts HK$14.3 billion net profit in FY10 with prospect of EPS CAGR of 22% in FY10-12, meaning stock trading at less than 10X FY12 P/E. UBS believes as 3G turns sustainably profitable and Hutchison can deleverage from operating cashflow rather than asset sales, growth in dividen (held constant since 2001) may resume from 2011.

The house keeps its buying call and raises its target price from HK$63 to HK$64 (equivalent to ADR US$41.10) The stock closed at HK$47.6 (ADR US$30.57), down HK$0.15 overnight Friday, lower than its ADR closing at US$30.85 on Wall Street Thursday.