Red chip seeks to expand its assets

PUBLISHED : Thursday, 15 April, 2004, 12:00am
UPDATED : Thursday, 15 April, 2004, 12:00am

Red chip China Everbright International is seeking to expand its investment in water treatment and waste-to-energy projects, while retaining infrastructure and property as key profit contributors.

Chief executive Chen Xiaoping said the company was in talks on various environmental projects - in Wuhan, Guangzhou, Zhongshan, Dalian and Changzhou - and expected to clinch a deal this year.

'It will gradually become a new growth engine for us,' he said.

While the company had only $172 million cash in hand as of the end of last year and a relatively high debt-to-asset ratio of 52 per cent, he said the company's bank credit lines would be sufficient to fund the investments.

China Everbright has invested in two joint ventures to generate power by burning garbage in Shunde, Guangdong province, and Suzhou in Jiangsu, as well as a water treatment project in Qingdao, Shandong province.

The company yesterday posted a net profit of $56.83 million, up from $1 million in 2002. The improvement was attributed to the sale of its loss-making timber business and a one-off gain of $25.94 million from its investment in the Qingzhou Bridge in Fuzhou.

The firm's main profit contributor was a 15 per cent stake in the Mawan power plant in Shenzhen, from which it booked a profit of $82.91 million. This was down from $87 million in 2002 due to a fall in power tariffs despite generation volume rising 4.8 per cent.

The volume growth was lower than that of Shenzhen, and Mr Chen said it was due to plant maintenance and lower power usage during the Sars outbreak last year.