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Christine Chan

Top Glory International Holdings yesterday made a long-awaited effort to buy assets from its parent, spending $418 million on a five-star hotel in Hainan's Sanya city at a difficult time for the hotel sector.

 It also announced plans to acquire various tourist attractions in the city from its parent, Top Glory Holdings (TGH), which is controlled by China National Cereals, Oils and Foodstuffs Import and Export Corp (Cofco).

 Yesterday's purchase of the 402-room Gloria Resort in Sanya - the largest of its kind in the city - will bring Top Glory International's hotel complement to five, having bought stakes in four hotels last year.

 The firm aims to build up a three- to four-star hotel chain in the mainland.

 Under the deal, the red chip will pay $116.7 million in cash and issue 230 million new shares worth $301.3 million to TGH, which will see its stake rise to 50.5 per cent from 45.85 per cent.

 It will also assume Gloria Resort's $386 million shareholder loan. The resort had an unaudited consolidated net tangible asset value of $144 million as of February this year after revaluation.

 The new shares, priced at $1.31 each, represent 8.6 per cent of the company's enlarged share capital.

 TGH holds an indirect 98 per cent in the resort hotel in Sanya's Yalong Bay.

 The resort began operations in August 1996. It earned a $3.8 million after-tax profit last year, after an unaudited loss of $6.75 million a year earlier.

 In the first two months of this year, net profit grew to $5.08 million.

 Occupancy rates have been rising, from 48.1 per cent in the June quarter last year to 54.6 per cent in December and 56.2 per cent in March 1998.

 During the quarter to March this year, it received 17,089 local guests and 13,601 foreigners.

 Last year, the company bought from its parent the Gloria Plaza Hotel in Beijing, 70 per cent of the Gloria Plaza in Dalian and a 60 per cent interest in the Gloria Plaza Hotel in Shenyang.

 All have a four-star rating. It also took a 20.7 per cent stake in the five-star Shangri-La Hotel in Shenzhen.

 Hotel performances began to slow in the fourth quarter last year but still accounted for 14 per cent of the red chip's operating profit last year.

 The four hotels' revenue reached $145 million last year.

 The Gloria Resort Hotel will be managed by a 65 per cent subsidiary of its parent, which also owns a further six hotels in the mainland.

 The Sanya tourist attractions the firm may buy include a butterfly pavilion and a theme park now being planned.



Top Glory snaps up hotel, targets prime tourist sites