Guangzhou Investment looks 'ideal China play'

GUANGZHOU Investment is a red-chip conglomerate with interests in property trading and development, industrial projects and the manufacture and sale of cement and newsprint.

Brokerage SBC Warburg recently put a buy on the stock, saying the company was an ideal China play.

Profit before exceptionals is expected to grow 31 per cent this year, boosted by the first full year's earnings from infrastructure investments and a recovery in the cement business.

Compared with other red chips, Guangzhou Investment has lagged, meaning upside potential is significant.

The company's basic strategy is to invest in high-entry-barrier industries in co-operation with foreign partners in sectors expected to enjoy strong long-term demand.

With a land bank in Guangzhou of 10 million square feet, the company is expected to benefit from the revival of the residential property sector in that city.