Hong Kong operations help push Everbright income 469pc higher

PUBLISHED : Friday, 28 March, 2008, 12:00am
UPDATED : Friday, 28 March, 2008, 12:00am

Profits at China Everbright, the Hong Kong-listed investment arm of the mainland financial conglomerate, jumped 469 per cent last year with a key contribution from operations in the city, where the company plans to expand.

Net profit for last year surged to HK$5.01 billion with about 26.35 per cent or HK$1.32 billion of that coming from the Hong Kong operations.

'We expect the profit contributed by our Hong Kong's operations to rise from about one-third of the total now to a half within three years,' said chief executive Chen Shuang.

Among its main businesses in the city, direct investment generated a pre-tax profit of HK$767 million, up 319 per cent from 2006.

Asset management earned HK$304 million and securities brokerage brought in HK$211 million, increases of 49 per cent and 148 per cent, respectively.

With earnings per share of HK$3.17, the company proposed a final dividend of 10 HK cents.

Yiu Chin, the director of financial analysis at Altruist Financial Group, said China Everbright's earnings last year were mainly driven by booming markets on the mainland and in Hong Kong. But he added that the bourses were being overshadowed by a possible global economic downturn triggered by the United States subprime crisis and that China Everbright's growth was expected to slow this year.

'Due to the subprime issues, the global investment atmosphere is deteriorating and, therefore, China Everbright may find it hard to reap as much earnings this year,' he said.

Mr Chen conceded that subprime-related problems did present challenges to the company, but he said he remained upbeat about its future, although he did not elaborate.

China Everbright's total assets stood at HK$20.3 billion at the end of last year and it had about HK$1.8 billion cash on hand.

Felix Man Kam-fai, a director at Hantec Futures, also expected to see a slowdown in China Everbright's earnings this year.

In addition to the recent market volatility in Hong Kong, the performance of the mainland's A-share market was also making China Everbright's prospects 'gloomier than ever', Mr Man said.

'About two-thirds of the company's profit still comes from its mainland operations and, if the mainland market continues to fall, China Everbright's profitability will definitely be influenced,' he said.

Shares of China Everbright jumped 5.19 per cent yesterday to close at HK$13.78.

Dark clouds

Weakening mainland markets paint a gloomy outlook for Everbright

Of total profit, the Hong Kong operations of the mainland conglomerate contributed: 26.4%