GUANGZHOU Investment Co says its proposed acquisition of four toll roads in Guangdong from its parent, Yue Xiu Enterprises, would provide good returns.
A company official said yesterday the Xinfeng toll roads could achieve an internal rate of return in 'the mid-20s' in percentage terms over 25 years - higher than the 18 to 20 per cent target of infrastructure funds.
She said the deal also had 'a single digit price earnings [multiple] this year', adding to its attraction.
She said the use of internal rate of return in the accounts would better reflect the situation.
Analysts had said earlier that the acquisition was not very attractive because the rate of return would be between 11 and 14 per cent, taking into account all costs.
Guangzhou Investment said earlier this week it was to acquire a 55 per cent stake in four toll roads from its parent for HK$68 million.
It also had to repay shareholders' loans of $37.79 million (about HK$35.14 million) and 37.75 million yuan of outstanding investment.