What the Broker Says...
China Overseas Land & Investment is engaged in construction, project management and property development and letting.
Due to overly optimistic market sentiment during the first three quarters of 1997, China Overseas bought many parcels of land and shares at high prices. When the property market bubble burst, the company was saddled with net losses of HK$925 million and HK$472 million for the financial years of 1998 and 1999, respectively.
Between 1998 and last year, the company embarked on a strategic restructuring and decided to increase its concentration in the mainland.
The proportion of the company's investment in mainland China and Hong Kong prior to 1997 was 3:7. The ratio is now at almost 7:3.
A return to the black (a net profit of HK$294 million) last year vindicated chairman Sun Wenjie's decision to look north and has prompted Core Pacific-Yamaichi to place a 'long-term buy' recommendation on China Overseas' stock in a recent report.