Shanghai Dazhong Taxi is asking shareholders for more money to fund expansion after proposing a cash dividend of 24 fen a share on 30.6 per cent higher net earnings of 101 million yuan (about HK$93.63 million) for the year to December 31. The results were based on international accounting standards. Based on Chinese accounting standards, the company's net profit was 100.81 million yuan, up about 22 per cent from 1994. The city's second largest taxi operator has proposed a three-for-10 rights issue, to raise between 206 million and 236 million yuan, to buy new vehicles and finance expansion in Jinan. The 49.14 million new shares are priced at between 4.20 and 4.80 yuan each, or 50 and 57 US cents, a discount of at least 30 per cent on its B-share closing price of 75 cents yesterday. Trading was suspended in the morning on announcement of its final results. The rights issue will be put to a shareholders' meeting in May. Analysts said the enlarged capital base would further dilute Dazhong's earnings per share, which were unlikely to improve in the next few years because its core taxi-leasing business seemed to have saturated Shanghai. 'Although Dazhong has an effective management which is likely to put the money to good use, we're not optimistic about its yearly earnings growth because it is unable to get new taxi licences,' an analyst at ING Barings Shanghai said. Based on net profit of 100.81 million yuan, Dazhong's earnings per share were 62 fen, compared with 65 fen in 1994. Turnover rose 38.05 per cent to 416 million yuan. The company did not give a detailed breakdown of the sources of profit, but analysts said its core taxi and transport-related business should account for about 55 per cent of earnings, with the rest coming from property and financial services. An analyst at a foreign brokerage said overseas investors were generally sceptical about Chinese companies and would not be pleased that Dazhong was asking for money again. This is the third time the company has made a rights issue since making its initial public offer to foreign investors in 1992. A portion of the rights funds would be used to modernise its taxi fleet. Chairman Yang Guoping had earlier indicated that Dazhong would upgrade 1,000 of its existing fleet of 1,500 taxis to the new Santana 2000 series by July next year. The rest would go towards setting up a tourist agency, a passenger transport company and a Dazhong taxi franchise in Jinan. The proceeds from the rights issue would account for most of the 300 million yuan Dazhong would need to finance a five-year expansion programme, which would transform the listed company into a national passenger and freight transport group. Analysts said that given the limited scope for expansion in Shanghai, Dazhong would have to look for earnings growth from out-of-town operations.