China Resources Enterprise

CRE targets parent deals to lift income

PUBLISHED : Friday, 25 June, 1999, 12:00am
UPDATED : Friday, 25 June, 1999, 12:00am

China Resources Enterprise (CRE) is considering the acquisition of two property-related assets from parent China Resources (Holdings), according to chairman Ning Gaoning.

He revealed the deals were worth several billion Hong Kong dollars, but gave no further details.

Contrary to expectations, the redevelopment of the Cheung Sha Wan godown site and China Resources Petroleum are not in the cash-rich CRE's pipeline.

The company now has $4 billion cash on hand.

CRE's intention to buy property assets from its mainland-based parent reflects the red chip's wish to sustain the proportion of income from property investment.

There could be an earnings gap to be filled after the phase three of Villa Esplanada is completed and sold in two years.

Last year, CRE's attributable profits from Hong Kong property investments fell by 35.88 per cent, while those in the mainland rose by 151.96 per cent.

The earnings contribution from its Hong Kong property investments has fallen from 48 per cent in 1997 to 32 to 33 per cent, according to the general manager of the company's property division An Lu.

He said earnings contributions from other businesses such as infrastructure projects and food distribution and trading would rise to give a 'balanced' income profile.

CRE's 80 per cent owned subsidiary, Redland Concrete Group, now aims at landing 50 per cent of contracts with the Mass Transit Railway Corp (MTRC) in the rail extension in Tseung Kwan O after having secured $200 million to $300 million worth of contracts with the MTRC as an on-site concrete supplier.

Redland managing director Howard S.C. Chan said the group would tender for more than $1 billion worth of contracts with the MTR.