Ng Fung Hong drops packaging concern
China Resources Enterprise (CRE) subsidiary Ng Fung Hong is to quit its stake in a mainland packaging concern to focus on its food distribution operations.
Ng Fung Hong, a foodstuff distributor and operator of the CRC supermarket chain, agreed last Tuesday to sell its entire 55 per cent stake in loss-making East World International for HK$10 million.
The buyers are Chan Kim-man and Chan Kwok-wai, two East World substantial shareholders and directors, according to CRE.
'[Ng Fung Hong] has adopted a strategy of expanding its food distribution operation in the Chinese mainland,' the firm said.
'The directors consider that the disposal represents a good opportunity for [Ng Fung Hong] to realise its investment in East World International and re-deploy the proceeds from the disposal for the development and future expansion of its food distribution operation.'
The transaction is to be executed by tomorrow.
East World's only asset is a 100 per cent equity interest in Zhongshan Changrong Packaging Industrial, which makes and markets packaging materials.
After a net profit of about HK$5.1 million in 1999, East World sank into the red with a HK$2 million loss last year. Turnover plummeted to HK$26.3 million from 1999's HK$53.1 million.
CRE is the SAR-listed vehicle of China Resources (Holdings), the Hong Kong-based investment unit of the Chinese foreign trade ministry.
CRE is undergoing a series of restructurings to remake itself into a leading distributor of consumer and industrial products in Asia.
As part of the reorganisation, CRE privatised previously-listed Ng Fung Hong late last year through a HK$2.4 billion share buy of the 46 per cent stake in Ng Fung Hong that it did not own. Aside from East World, Ng Fung Hong also sold part of its loss-making grape wine and drinks unit in November last year, ahead of its privatisation.
The latest transaction will involve two payments of HK$4 million and HK$6 million, respectively. The first instalment will be paid by today, the second by December 20.