The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Parkson buys out Liaoning store for 730m yuan
Parkson Retail Group, the Beijing-based department store unit of Malaysia's Lion Group, will pay 730 million yuan to acquire the 49 per cent stake it does not already own in its flagship store in Liaoning province including related property.
The acquisition marks the second store purchase by Parkson in a month after it said last month that it would buy a Jiangxi department store it manages for 510 million yuan.
The Liaoning deal was reached after Parkson had taken legal action against its Anshan Tianxing Parkson Shopping Centre venture partner, Li Zhongyong, to retrieve a 70 million yuan loan.
Under the deal, Parkson will pay in cash 280 million yuan for the stake and 450 million yuan for the property.
The store, in Liaoning's capital Anshan, recorded a 55.5 per cent jump in net profit after tax to 32.2 million yuan last year while operating revenue rose 25 per cent to 130.5 million yuan.
Rental income for the Anshan Parkson property was 25 million yuan last year.
Parkson said the acquisition would 'immediately enhance the growth and profitability and allow for greater efficiency and speed in the implementation of its business expansion'.
DBS Vickers analyst Mavis Hui said in a research report yesterday that the deal would be positive to Parkson's earnings prospect as the store was the third-best performing store under Parkson.
'The store is expected to sustain its strong growth momentum ahead,' Ms Hui said.
The deal comes as investors were anticipating Parkson to buy out joint-venture stakes and stores it manages to drive growth.
Parkson, which reported an 85.8 per cent rise in net profit last year to 460.8 million yuan, said earnings had been lifted by its purchase of the remaining 44 per cent stake in Beijing Parkson, which has five stores, for 525 million yuan in July last year. The group bought two other stores in Kunming for 315 million yuan in November.
Parkson, which owns 25 stores and manages 11 in 26 cities, plans to open five stores in Beijing, Shanghai, Chengdu, Xian and Hangzhou this year.
Shares in Parkson, which were suspended from trading on Monday pending the Anshan announcement, surged as much as 5.57 per cent yesterday, before closing at HK$54.65, down 0.18 per cent for the day.