Beijing Enterprises to invest in beer, utilities

PUBLISHED : Friday, 01 April, 2011, 12:00am
UPDATED : Friday, 01 April, 2011, 12:00am


Red chip Beijing Enterprises Holdings will pour 5 billion yuan (HK$5.9 billion) into breweries, water and gas supply to spur growth this year.

The spending plan followed a 10 per cent rise in attributable profit to HK$2.63 billion, or HK$2.32 per share, last year at the Beijing municipal government conglomerate.

Executive director and chief financial officer Jimmy Tam Chun-fai said yesterday that the spending, which was 25 per cent more than in 2009, would be funnelled into core operations partly through mergers and acquisitions.

Vice-chairman and chief executive Zhang Honghai said discussions on taking over regional breweries on the mainland were under way to extend the distribution and capacity of the group's flagship, Yanjing Beer. 'We position our beer brands at the upper market segment,' Zhang said. 'But the high-end segment is getting more and more competitive.'

The group aimed to boost capacity at its breweries by one-third to 8 million kilolitres in five years, he said.

Net profit for the brewery division leapt 19.24 per cent to HK$406.09 million on an 8.1 per cent increase in revenue to HK$10.54 billion. Tam said the average selling price of beer products was raised by between 6 per cent and 8 per cent to offset industry-wide inflation in material costs. The beer division contributed 14.4 per cent of the group's attributable profit.

Its bread and butter, gas supplier Beijing Gas Group, generated HK$1.94 billion in attributable profit, or 68.9 per cent of the group's total. Revenue at Beijing Gas, which primarily serves the capital, grew 18.17 per cent to HK$14.11 billion last year.

Beijing Gas's profit grew 6.59 per cent, but its gross profit margin was squeezed to 14.5 per cent due to higher depreciation charges and a warmer weather last year, Tam said.

Zhang said Beijing Gas would explore opportunities in new energy sources such as coal-bed gas and tri-generation projects, which produce heat, cooling and electricity.

The group's water supply and sewage treatment division, Beijing Enterprises Water Group, yielded HK$386.76 million in attributable profit, a 44.38 per cent rise.

Revenue increased 21.82 per cent to HK$2.40 billion on stronger demand.

The group's final dividend remained at 45 HK cents per share. The full-year dividend was 7.69 per cent higher at 70 HK cents per share after the interim dividend was raised by 25 per cent to 25 HK cents per share.

Beijing Enterprises shares climbed 40 HK cents, or 0.9 per cent, to HK$44.4 yesterday before the results were made public.