Red chips, the Hong Kong-incorporated and listed companies that are controlled by mainland parents, have seen strong gains since last year as investors bet on their ties with China. Red chips have a competitive edge over their siblings such as H shares and B shares as their management is, in general, more transparent and flexible. The recent mania over red chips has been buoyed by expectations of a spate of asset injections from their mainland parents at discount prices - which is not seen in H shares and B shares. H-share companies are mainland-incorporated enterprises picked by the China Securities Regulatory Commission (CSRC) for listing in Hong Kong. B-share companies also are mainland-incorporated enterprises picked by CSRC for issuing shares to foreigners, but are confined to floating on the Shanghai or Shenzhen stock exchanges. 1. BEIJING DEVELOPMENT: Its business centres on the manufacture and sale of woollen and worsted products, with investments in property, trading and restaurant operations. It is more than 45 per cent owned by Illumination Holdings, controlled by Beijing International Trust and Investment Corp. Its turnover in the first half of last year dropped 25 per cent to HK$44 million, with net profit plunging to $213,000, from $13 million in 1995. 2. BEIJING ENTERPRISES HOLDINGS: Ultimately controlled by Beijing municipal government through Beijing Holdings and other entities, the company is a conglomerate with interests in consumer products (such as Yanjing beer), telecommunication products, hotels and tourism, restaurants and infrastructure projects. Chaired by Beijing vice-mayor Hu Zhaoguang, it is to be listed this month. Its profit for last year to December is estimated at HK$287.8 million. 3. CHINA AEROSPACE INTERNATIONAL HOLDINGS: Owned by China Aerospace Corp, China's state-owned rocket maker, it makes electronic and plastic products, light vehicles and related parts and accessories. It also participates in property investment and development. Its interim net profit fell 42 per cent to HK$58 million in the first six months of last year, while turnover added 1 per cent to $1.01 billion. In March, it raised $547 million in a share placement to develop an optical-fibre digital cable broadcasting network in China, manufacturing capacity and a sales network for digital receiving coders and a satellite broadcasting network. 4. CHINA ASSETS: A direct investment fund in China, its investment portfolio ranges from crafts weaving and dyeing, plastics and electrical products, to glass, cement, and iron and steel. Its major shareholder is China Venturetech Investment Corp, majority-owned by the State Science and Technology Commission and the Finance Ministry. In the first six months ending June last year, it earned net profit of US$1.39 million, 37 per cent more than $1.01 million in 1995. 5. CHINA EVERBRIGHT-IHD PACIFIC: It recently became the listed flagship of China Everbright Holdings, an investment conglomerate directly controlled by the State Council. The firm has been restructured, with its core businesses now focusing on banking and financial services under its new chairman Zhu Xiaohua, former deputy governor of the People's Bank of China. It owns a 20 per cent stake in the International Bank of Asia, and 5 per cent of National Mutual Asia. Its two sister companies are China Everbright International and China Everbright Technology. In the six months ended September last year, it earned HK$3.74 million in net profits, up from a net loss of $27.96 million a year earlier (see also companies No. 6, 7 and 30). 6. CHINA EVERBRIGHT INTERNATIONAL: Also controlled by China Everbright Holdings, the firm is involved in property investment and industrial manufacturing. In the first six months ended June last year, the firm saw its net profit fall by 95 per cent to HK$2.02 million. 7. CHINA EVERBRIGHT TECHNOLOGY: The firm, controlled by China Everbright Holdings, is undergoing restructuring which will see it dispose of its loss-making television making facilities. It plans to invest in China's telecommunications industry. In the six months ended September 30, it earned a net HK$74.59 million, based largely on an exceptional gain of $94.14 million. 8. CHINA FOODS HOLDINGS: It is a sister company of Top Glory International Holdings - both listed arms of China National Cereals, Oils and Foodstuffs Import and Export Corp. Its business includes food processing and property investments. It also holds majority interests in the shopping arcade of East Asia Gardens at Tsuen Wan. It earned HK$17.38 million on a turnover of $626.57 million for the year to March 31, 1996 (see also 49). 9. CHINA MERCHANTS HAI HONG: The company has re-invented itself as an infrastructure play with the purchase of five toll roads and a stake in Shenzhen-listed B share China International Marine Containers last month, funded by a HK$3.85 billion share placement. Owned by China Merchants Holdings, under the Ministry of Communications, its operations are initially comprised of industrial, manufacturing and shipping. Last year, its net profit soared 54 per cent to $158 million, propped up by an exceptional gain of $54.8 million from the spin-off of Ming Wah Universal on the Singapore stock exchange. Turnover for the period fell 10 per cent to $802 million (see also 50). 10.CHINA OVERSEAS LAND AND INVESTMENT: Owned by China State Construction Engineering Corp, under the State Council, it is a property developer in Hong Kong with prime sites in China. It plans to expand its infrastructure portfolio and spin off its construction business. It is the sole second-tier property developer involved in an airport railway property development project. In January, it raised HK$1.52 billion in a share placement. Last year, it made 5 per cent more in net profit to $861.29 million. 11. CHINA PHARMACEUTICAL ENTERPRISE AND INVESTMENT CORP: The company, majority owned by Shijiazhuang Pharmaceutical Group Co, in Hebei province, is a manufacturer of bulk vitamin C and penicillin. Its ultimate parent, Shijiazhuang municipal government, aims to turn the company into its window company in Hong Kong with diverse areas of operations, ranging from pharmaceuticals, food and chemicals to investments in public utilities. It posted a 73 per cent surge in net profit to HK$33.1 million for the year to December. 12. CHINA RESOURCES BEIJING LAND: It is a spin-off of China Resources Enterprises, holding a 62.5 per cent stake in Beijing Huayuan Property Co, which focuses on reconstruction of old and dilapidated builings in Xicheng district in Beijing and large-scale residential developments around Beijing. It was listed in November last year. Net profit was up 38 per cent to HK$250.39 million last year, while turnover dropped to $720.71 million from $745.35 million. (see also 13 and 34) 13. CHINA RESOURCES ENTERPRISE: The listed flagship of China's Ministry of Foreign Trade and Economic Co-operation, its business covers property investment and development, godown and cold storage operations, beer production and industrial investment. It also owns 26 per cent of listed Ng Fung Hong. In December, it bought from its immediate parent, China Resources (Holdings), a 10 per cent stake in Hongkong International Terminals for HK$3.5 billion, funded by a share placement. 14. CHINA TRAVEL INTERNATIONAL INVESTMENT HONG KONG: Listed in November 1992, the company has interests in tour and hotel businesses, freight forwarding businesses, three theme parks in Shenzhen and a steel plant and infrastructure projects. Chaired by former vice-mayor of Shenzhen, Zhu Yuening, the company is controlled by China Travel Service (Holdings) HK which is under the direct control of the Overseas Chinese Affairs Office of the State Council. It announced a HK$109 million net profit and a $704 million turnover in the first half to June last year. 15. CIG-WH INTERNATIONAL: Controlled by the People's Insurance Co of China through China Insurance HK (Holdings) Co, its business centres on construction of superstructures, foundation piling and substructure works, civil engineering, electrical and mechanical works, and machinery leasing. Net profit for the first six months of 1996 was HK$21.26 million, while turnover reached $230.22 million. 16. CITIC PACIFIC: As the Hong Kong-listed arm of China's largest investment company, China International Trust and Investment Corp, which is under the direct control of the State Council, it has a great variety of businesses: airline operation, trading and distribution, warehousing, property investment, telecommunications, power generation, chemical waste treatment and infrastructure. The company, a Hang Seng Index constituent stock, holds 25 per cent of Cathay Pacific and 28.5 per cent of Hong Kong Dragon Airlines. Last year, it made attributable profit of HK$8.68 billion, up 123 per cent, boosted by one-off gains from selling part of its stake in Hongkong Telecom and Hong Kong Dragon Airlines. Minus the exceptional gains, profit rose a more moderate 18.8 per cent to $3.56 billion. 17. CNPC (HONG KONG): It became the listed arm of state-owned China National Petroleum Corp, which has a monopoly of China's on-shore oil and gas exploration and development, in 1993 through a backdoor listing. It focuses solely on the upstream oil industry. The company is still small but its parent is the most powerful and wealthiest among red-chip parents as it owns half of Asia's total oil reserves, worth more than US$100 billion. The company's first-half loss last year narrowed from HK$6 million to $5.7 million, although its turnover almost doubled to $13 million. 18. CONTINENTAL MARINER INVESTMENT: Businesses include shipowning, securities trading, property development and investment and industrial investment. The company is owned by Source Holdings, a joint venture of flagship investment company, China International Trust and Investment Corp, and China Poly Group, the investment arm of the People's Liberation Army. Its net profit rose 29 per cent to HK$31 million in the first half of 1996. It also owns 49 per cent of Poly Investments, a chemical fibres manufacturer. Wang Jun, son of late vice-president Wang Zhen, is the company's chairman, while He Ping, late paramount leader of China Deng Xiaoping's son-in-law, is vice-chairman (see also 37). 19. COSCO PACIFIC: As the world's fourth largest container-leasing company, it owns and operates about 310,000 teus (20 ft equivalent units) of containers. It also has a 50 per cent stake in Container Terminal 8 (East) and an 11 per cent stake in the Tuen Mun river terminal project. Its parent, China Ocean Shipping (Group) Co, wholly owned by the Ministry of Communications, is China's largest shipping firm. The firm's attributable profit rose 63 per cent to HK$585.9 million last year, with turnover up 16.5 per cent to $1.1 million (see also 46). 20. DENWAY INVESTMENT: Its main asset is its 43.7 per cent indirectly owned joint venture with French car-maker Peugeot Citroen, Guangzhou Peugeot Automobile Co, which produces Peugeot cars in Guangzhou. Yue Xiu Enterprises (Holdings) has taken over from Guangzhou Jinda Motor Holdings as the largest shareholder of the company earlier this year as part of the Guangzhou municipal government's plan to breathe new life into the loss-making car-maker. Both Yue Xiu and Guangzhou Jinda are controlled by the Guangzhou municipal government. The company has been bleeding red ink since 1994 with losses of HK$75 million in the first half of last year, $233 million in 1995 and $148 million in 1994, mainly burdened by the Peugeot joint venture which has been producing far below capacity (see also 27). 21. FIRST SHANGHAI INVESTMENTS: The majority of the company's businesses are securities investment and direct investments. Its major shareholder, International Enterprises Investment, was co-owned by China Venturetech Investment and Shenyin & Wanguo Securities, formerly Shanghai International Securities. Last year, it acquired 33 per cent of Goodbaby Child Products Co, which is a market leader in producing infant and child-related products. It almost halved its losses to HK$3.4 million in the six-month period to June 30 last year, from $6.3 million the previous year (see also 39). 22. FOUNDER (HONG KONG): Its competitive edge lies in software development such as electronic publishing systems, systems integration and multimedia systems for the China market, and it is expanding into other Asia markets such as Japan, Korea and Malaysia. It also distributes computers and accessories of leading brands such as Apple, Digital, Unisys, WYSE, Hewlett-Packard and its own brand, Founder, in China. Its major shareholder is Peking University Founder Group Corp, a wholly owned subsidiary of the state-run Peking University. The company, listed in December 1995, has posted 16 per cent growth in net profit to HK$126.8 million for the year to December on a 35 per cent jump in turnover to $1.48 billion. 23. GITIC ENTERPRISES: Controlled by Guangdong provincial government through Guangdong International Trust & Investment Corp HK (Holdings), the company is engaged in manufacturing and trading of construction materials such as marble and granite and owns a property in Guangzhou. It announced a 16.2 per cent jump in net profit to $41.6 million for the year ending December and a 20 per cent increase in turnover to $332.4 million. It made history in the Hong Kong stock market with a record subscription rate of 892 times the shares available for the public when it was listed in March, although the float almost flopped when the China Securities Regulatory Commission complained it had not obtained its approval for the listing. 24. GUANGDONG INVESTMENT: A Hang Seng Index constituent stock, the company has a long-established record in Hong Kong with five core businesses, namely hotels and tourism, manufacturing, infrastructure, retail and wholesale, and property development and investment. It will consider spinning off its mature businesses with the brewery business expected to be the next to be listed, in the middle of the year. It is the listed arm of the Guangdong provincial government controlled through Guangdong Enterprises (Holdings). Its attributable profit rose 4.4 per cent to HK$604.2 million for the year to December, while turnover fell 20 per cent to $6.47 billion and operating profit fell about 10 per cent to $814.2 million (see also 25, 26). 25. GUANGDONG TANNERY: The company, a cow hides and sheep skins processor formerly known as Nanhai Tannery, was spun off from Guangdong Investment in December 1996. Its record as the most oversubscribed stock was broken by Gitic Enterprises. Its public offer was 667 times over-subscribed. It reported an attributable profit of HK$64.38 million for the year to December. 26. GUANGNAN (HOLDINGS): It is the sole distributor in Hong Kong of all live and fresh foodstuffs exported from Guangdong province and has interests in Japanese fast-food chain Genroku Sushi, some food-processing plants and a supermarket chain. It is a sister company of Guangdong Investment, both of which are controlled by the Guangdong provincial government through Guangdong Enterprises (Holdings). It has been on a buying spree with a view to becoming a diversified food giant. Its first-half profit soared 97.9 per cent to HK$95.2 million, with turnover up 52.1 per cent to $2.67 billion and operating profit rocketed 138.1 per cent to $136.7 million. 27. GUANGZHOU INVESTMENT CO: It is controlled by Yue Xiu Enterprises (Holdings), the commercial arm of the Guangzhou municipal government in Hong Kong. Affected by a slower growth in its core businesses in property, cement and paper manufacturing, the company announced a rise of only 5.5 per cent in net profit to HK$438 million for the year to December. Turnover surged about 27 per cent to $2.62 billion and operating profit fell about 17 per cent to $436 million (see also 28). 28. GZI TRANSPORT: Spun off from Guangzhou Investment Co in January this year, the infrastructure company posted a 53 per cent surge in net profit to HK$69.2 million on a pro forma basis for the year to December while turnover rose about 38 per cent to $147.8 million. Its main assets are toll roads in the Guangzhou area but it is expected to expand into other infrastructure projects, and other areas of Guangdong. Its ultimate parent is the Guangzhou municipal government. 29. HUALING HOLDINGS: It manufactures household electrical appliances including refrigerators, air-conditioners, and sterilisation cabinets. Guangzhou International Trust & Investment Corp took over from Guangzhou Baiyun Agriculture Industry and Commerce Corp as the controlling shareholder of the company, both of which are controlled by the Guangzhou municipal government. Hit by an unfavourable operating environment, the company's profit started sliding soon after it was listed in December 1993. Its first-half profit to June last year was HK$16 million. The full year profit in 1994 was $94.2 million. 30. INTERNATIONAL BANK OF ASIA: China Everbright-IHD Pacific recently bought from its parent China Everbright Holdings a 20 per cent stake in the bank. 31. KA WAH BANK: The bank, controlled by China International Trust and Investment Corp, has about 33 branches in Hong Kong. In the year to December 31 last year, it made a net profit of $409.46 million, up from $319.39 million the previous year. 32. LEGEND HOLDINGS: It manufactures Legend brand computers and components and distributes computer products including AST, IBM and Hewlett-Packard. It was listed in February 1994 and is 42 per cent-owned by the New Technology Developer Inc Institute of Computing Technology Academia Sinica (commonly known as Beijing Legend) which is controlled by the Chinese Academy of Sciences under the State Council. Official statistics showed Legend had overtaken its Western competitors to become the largest seller of personal computers in China last year with a 13 per cent market share. Interim results showed a 88 per cent increase in attributable loss to HK$68 million. The sudden surge in the supply of PC motherboard components, which triggered a drastic price cut in memory items, was cited as the main reason for the loss. It is expected to receive asset injections from its parents to turn it around. 33. MIN XIN HOLDINGS: The major businesses of the group are in insurance and property letting and sub-letting. It is controlled by the Fujian provincial government through Fujian Investment and Enterprises. It entered into a joint-venture agreement late last year to invest US$18 million in the Zhangzhou National Highway and Ningde National Highway. Its 1996 net profit surged 49.5 per cent to HK$52.6 million. Its 36.75 per cent-owned Xiamen International Bank has applied to the People's Bank of China for permission to list in Hong Kong. 34. NG FUNG HONG: It enjoys the exclusive rights to import fresh, live and frozen foodstuffs from China, except from Guangdong, into Hong Kong. China Resources Holdings, under the Ministry of Foreign Trade and Economic Co-operation, owns 35 per cent of the company, while China Resources Enterprise holds another 26 per cent. It plans to establish five core operations by 2000: covering supermarkets, deep-sea fishing and seafood processing, abattoirs and meat processing, wines and beverages and trading. Last year, its net profit rose 20 per cent to HK$363.14 million, although total revenues fell 13.4 per cent to $4.49 billion due to the 'mad cow disease' scare in Britain (see also 13). 35. ONFEM HOLDINGS: It is majority-owned by China Nonferrous Metals Holdings (Hong Kong), a company controlled by state-owned China National Non-Ferrous Metals Industry Corp and chaired by Wu Jianchang. Its principal activities are investments in property, specialist construction contracting business and rare and precious metals businesses. Early this year it sold of its non-ferrous metals manufacturing and trading arm, Oriental Metals, to its Hong Kong parent and cashed in HK$470 million (see also 36). 36. ORIENTAL METALS(HOLDINGS) CO: It is a subsidiary of the state-owned China National Nonferrous Metals Industry Corp (CNNC), chaired by Wu Jianchang. It focuses on manufacturing and trading of non-ferrous metals such as aluminium and copper. Its profit crashed 99 per cent to HK$1.28 million for the year to December, on falling prices of metals, particularly copper and aluminium. This was despite a turnover dip of only 1 per cent to $3.01 billion. Operating profit fell 19 per cent to $78.8 million. 37. POLY INVESTMENTS HOLDINGS: An associate of Continental Mariner Investment, focusing on chemical fibre manufacture, investment and property investment, security investment and industrial investment holdings. Profit in the six months to September 30 was HK$12.4 million on $217.46 million turnover (see also 18). 38. SHANGHAI INDUSTRIAL HOLDINGS: Controlled by Shanghai Industrial Investment (Holdings), it is the listed arm of the Shanghai municipal government in Hong Kong. Since listing in May last year, it has raised another HK$7.91 billion in two share placements to acquire assets from its parent, on the back of market expectations of asset injections by the Shanghai government. Its businesses include cigarettes, packaging materials and printed products, personal care and cosmetic products. Newly acquired businesses are car-parts joint ventures, toll roads and a prominent shopping centre. 39. SHENYIN WANGUO (HK): Its main businesses include securities underwriting, financing and broking. It is controlled by China's biggest brokerage, Shenyin & Wanguo Securities Co. Its turnover for the six months of last year was HK$389.57 million. Net profit was $20.29 million. 40. SHENZHEN INTERNATIONAL: Its ultimate holding company is Shenzhen Building Materials Industrial Group. Formerly named Innovisions Holdings, it manufactures and retails optical-related services. Its business also includes property development in China and sales of building materials. In October, it acquired more than 14 per cent of Shenzhen-listed China Southern Glass Holding from its parent. It reported interim net profit of HK$1.68 million, on turnover of $41.95 million for the six months of last year. 41. SHOUGANG CONCORD CENTURY: The firm, controlled by Shougang Concord International, is mainly involved in iron ore and other metals trading. Last year, it posted a disappointing more than 60 per cent fall in net profits to HK$29.68 million. (see also 42, 43, 44) 42. SHOUGANG CONCORD GRAND: The firm is mainly involved in property development and investment in Hong Kong and the mainland. In May last year, Shougang International increased its holding and became the majority shareholder in the company after Deng Zhifang , the youngest son of China's late paramount leader Deng Xiaoping , resigned as a director and sold his stake to Shougang International. But the younger Deng has remained a consultant to the company. Last year, the company swung back to profit of HK$115.88 million, compared with a net loss of $54.70 million the previous year. 43. SHOUGANG CONCORD INTERNATIONAL ENTERPRISES: As the listed flagship of China's steel giant Shougang Corp, it holds controlling interests in three other listed companies - Shougang Concord Century, Shougang Concord Grand, and Shougang Concord Technology. Its core businesses include steel production and metal trading, shipping and property investment. Last year, the company reported net profits of HK$100.39 million, down from $185.31 million. The company and its subsidiaries burst into the headlines in February 1995 when Zhou Beifang, former head of the Shougang operations, was arrested on corruption charges, and has recently been sentenced to a suspended death sentence. In the following year, Deng Zhifang resigned as a director of Shougang Concord Grand. 44. SHOUGANG CONCORD TECHNOLOGY: The company makes telephone accessories and computer parts. Last year, it posted net earnings of HK$35.1 million, slightly up from $30.07 million. 45. SHUM YIP INVESTMENT: Floated in March, the company is the listed arm of the Shenzhen municipal government, controlled through Shum Yip Holdings Co. It is involved mainly in property and transport business, with the target of transforming itself into a conglomerate with interests in the infrastructure sector. It is estimated to have pro forma profit of more than HK$155 million for the year to December 1996. 46. SHUN SHING HOLDINGS: It is a building contractor, recently taken over by Cosco (HK) Property Development under the Ministry of Communications with a 61 per cent stake. The company, stablemate of Cosco Pacific, announced net losses of HK$76.1 million for the year ended August. 47. SILVER GRANT INTERNATIONAL INDUSTRIES: It is a conglomerate with interests in property investment, securities trading and industrial investment. It is ultimately controlled by China National Non-Ferrous Metal Industry Corp, headed by Wu Jianchang. It has teamed up with retail chain Beijing Wangfujing to set up department stores, and is considering acquisition of toll roads in mainland cities. The group reported a 51.5 per cent increase in net profit to HK$165.2 million for the year to December 31, 1996. Most of the profits came from the sale of 80 million H shares and three properties. 48. STONE ELECTRONIC TECHNOLOGY: Owned by Beijing Stone Group, a collectively owned enterprise, it is engaged in manufacture, distribution and sale of computers, electronics, electrical and telecommunications products and office equipment. Its net profit rose 44.7 per cent to HK$10.22 million in the six months to June last year, when turnover edged up 1 per cent. 49. TOP GLORY INTERNATIONAL HOLDINGS: Ultimately owned by China National Cereals, Oils and Foodstuffs Import and Export Corp, it recently spent HK$1.05 billion on hotel acquisitions from its parent Top Glory Holdings. These included interests in the Gloria Plaza Hotel in Beijing and the Gloria Plaza in Dalian. Its attributable profit rocketed to $138.7 million for the year to September from $3.5 million in the previous period. Turnover increased 80 per cent to $727 million (see also 8). 50. UNION BANK OF HONG KONG: About 60 per cent owned by China Merchants Holdings, it aims to increase its branches in Hong Kong from 21 to 25 in three years. Last month, it sold to its stablemate China Merchants Hai Hong a 16.6 per cent stake in the Luomei section, in Guangdong province, of National Highway 324, as the bank will focus on banking and financial business. The bank raised HK$505 million in a share placement in March when it announced its net profit rose 20 per cent to $270.4 million last year (see also 9). PROSPECTIVE LISTING CANDIDATES: 1. CHAOZHOU INDUSTRIES: An eel farming and roasting spin-off of Guangnan Holdings. 2. DALIAN INTERNATIONAL: The window company of Dalian city. 3. TSINLIEN CO: The window company of the municipal government of Tianjin, China's third-largest municipality directly under Beijing control. 4. CHU KONG SHIPPING DEVELOPMENT CO Controlled by Guangdong Province Navigation Holdings Co, it operates cargo services and toll roads.