'Now is the right time to have some co-operation with investment funds,' chief executive Eric Oei Kang said, noting that the company had been tidying up its finances for the past two years.

He refused to elaborate on the plans, saying they were still at the preliminary stages.

Chen Libo, chief operating officer who oversees the mainland property business, said Hong Kong Construction would speed up revenue return of existing projects and negotiate with major mainland banks for syndicated loans to fund its projects.

Shifting its focus from traditional core construction to commercial property development, infrastructure and renewable energy, the company last year invested heavily in Heilongjiang wind power plants and Guilin expressways and acquired a water supply company in Yangpu, Shanghai.

But the grand diversification plans are taking their toll on the company.

Hong Kong Construction reported its debt-to-equity ratio jumped to 33.5 per cent last year, from 12.5 per cent in 2004. Executive director and chief financial controller Selina So Hong said this was 'not satisfactory'.

The shift in company focus began in 2004 after Creator Holdings, a company wholly owned by Mr Oei, bought most of Hong Kong Construction's debt, making Creator the controlling shareholder.

From construction in Hong Kong, the company's main source of income shifted to property leasing and sales and construction in the mainland, which accounted for 74.5 per cent of its revenue last year.

Like another Hong Kong-listed company, Shui On Construction and Materials, Hong Kong Construction is now pinning its hopes on mainland property development for growth.

Hong Kong Construction last week announced that it would develop a 1.5 billion yuan hotel in Tianjin through a joint venture in which it owns a 90 per cent stake.

It has also teamed up with the government of Nanxun district in Huzhou city, Zhejiang province, to build a local trade centre.

Under the joint-venture agreement, the local government would be responsible for making the trading centre the central market for construction materials and furniture suppliers in Nanxun, while Hong Kong Construction would pay the land premium and build and operate the trading centre.

It estimates investment for this project would be 264 million yuan.

At the end of last year, Hong Kong Construction's total borrowings reached $1.32 billion, up 124 per cent on 2004 while cash and cash equivalents were $597.7 million.

The company recorded a 44.7 per cent jump in last year's net profit to $367.8 million, taking into account a waiver of minority shareholder loans of $206.7 million, plus contributions from property disposals and restructuring of group assets. Turnover fell 75.3 per cent to $248.3 million, following the completion of its construction projects in Hong Kong.

Last week, Mr Oei said the company wanted to increase its investment in a 250,000 square metre commercial and hotel development in Shanghai, in which it has a 10 per cent stake, from 600 million yuan to 850 million yuan.

He said the project was expected to be completed ahead of the Shanghai World Expo in 2010.

Although the company's aggressive moves had resulted in higher gearing, it is paying dividend to shareholders for the first time since 1998.

A final dividend of five cents per share was recommended for last year.

Mr Oei also said the company hoped to spin off its renewable energy segment for a Hong Kong listing, although there were no concrete plans yet.

Its subsidiary Hong Kong Energy (Holdings) also plans to form joint ventures with several major companies in the mainland and Hong Kong involved in renewable energy, including blue chips listed in Hong Kong, according to Mr Chen.