Pharmaceutical firm to develop wind project

PUBLISHED : Friday, 08 June, 2007, 12:00am
UPDATED : Friday, 08 June, 2007, 12:00am

Hong Kong Pharmaceutical Holdings, which is seeking to diversify its earnings away from medical products, plans to invest 397 million yuan in a wind power project in Inner Mongolia.

The company will develop the project in a joint venture with Shanghai Shenhua after buying a unit of China Wind Power Holdings for HK$200 million.

The acquisition, which still needs the approval of investors, comes as the mainland seeks to boost the amount of energy produced from environmentally friendly sources. The nation's total wind generation capacity doubled last year to 2,600 megawatts and is expected to almost double again this year to 5,000 MW.

Hong Kong Pharmaceutical, which avoided bankruptcy after a debt restructuring last year, is facing mounting operating costs because of rising rents at its shops and the opening of new distribution networks.

It reported a net loss of HK$39.45 million for the six months to September last year from a profit a year earlier.

The company, whose core business is the wholesaling and retailing of medical and healthcare products, raised HK$387 million in a share sale last month, with the net proceeds planned for the wind power projects.

Meanwhile, motor vehicle parts-maker Shenhua Holdings will raise 261 million yuan through bank loans.

The 50MW wind joint venture may begin generating electricity in November, and is expected to recoup its investment within seven years.

Hong Kong Pharmaceutical said the venture would focus on the development, construction and operation of wind power electricity facilities, as well as provide consultancy services.

Its shares closed 6.06 per cent higher yesterday at 70 HK cents.