Shenzhen Expressway eyes stakes in Guangdong

PUBLISHED : Tuesday, 22 February, 2005, 12:00am
UPDATED : Tuesday, 22 February, 2005, 12:00am

Shenzhen Expressway is in talks on acquiring minority stakes in two toll roads in Guangdong in its latest efforts to boost assets, according to investment department manager Li Jian.

The projects targeted are a toll road between Huizhou and Heyuan and a 77.32km class one highway connecting Shantou and Fenshuiguan.

The potential investment in each project would cost the H-share firm about 300 million yuan, Mr Li said yesterday.

The toll roads, which are in service, are among a bunch of infrastructure interests in Guangdong put up for sale to foreign investors as part of local government attempts to lure capital and management expertise.

After announcing the group's 53.43 per cent drop in net profit to 418.87 million yuan last year, chairman Chen Chao said he expected acquisitions would be a key driver of future profit and revenue growth.

'The Guangdong government's scheme of putting up more than 20 expressway projects on the market provides us ample investment opportunities,' he said.

Last week, Shenzhen Expressway agreed to buy a 56.28 per cent interest in the class one Qinglian highway, an inter-province backbone expressway between Qingyuan in Guangdong and Lianzhou in Hunan, for 1.8 billion yuan.

The group, which plans to reconstruct the highway at a cost of 3.9 billion yuan, expected the toll road would yield an internal rate of return of 9 per cent to 11 per cent upon the completion of the reconstruction in 2007.

'We expect the Qinglian project will generate meaningful profit contribution by 2008,' Mr Li said.