Two troubled locally listed state-controlled manufacturing companies have announced major overhauls of their businesses in the hope of turning around their fortunes. Nanjing Panda Electronic and Tianjin Bohai Chemical Industry (Group) - both of which are listed as H-shares - yesterday announced what amounts to a significant transformation of their principal businesses via asset swaps. They are among the first H share companies to dispose of core businesses. Nanjing Panda will get rid of its television business and Tianjin Bohai its chemical business. Each had been a core part of their company's strategy but had become unprofitable. Instead their parents will inject profitable businesses into them. It is rare for H shares to diversify beyond their core businesses due to China's stringent industrial policies. The restructurings have come as Beijing accelerates its state sector reforms as part of its entry into the World Trade Organisation by early next year. The moves are seen as enabling both businesses to compete more effectively with firms from abroad. Under a HK$1.3 billion asset-swap deal with Tianjin Municipal Investment Company (TMIC), an enterprise wholly owned by the Tianjin municipal government, Tianjin Bohai will dispose of its entire core loss-making chemical business to TMIC. In return, TMIC will inject its profit-making sewage water-processing business, toll road and toll station businesses into Tianjin Bohai. As part of the deal Tianjin Bohai's parent, Bohai Corporation, will transfer its 63.09 per cent interest in the company to TMIC without a cash consideration. TMIC will also take up all of the debt of Tianjin Bohai's chemical business. Upon completion of the deal, Tianjin Bohai will replace its heavily indebted and loss-making chemical business with a new urban construction and environmental protection business which has a dominant market position, according to the company. The company will also replace all existing directors with a senior management team from TMIC. Tianjin Bohai is to be renamed Tianjin Capital Environmental Protection. 'We expect the sewage water treatment operations will improve performance, profitability, achieve stable returns to shareholders and improve our cashflow position in the future,' said chairman Gong Suozhu. The company, one of the mainland's largest chemical producers, was among the worst performing H shares in the past two years. It reported the biggest loss among the 41 H shares for the year ended 1998 as it sank into the red to the tune of 608.05 million yuan (about HK$569.37 million). Although the company trimmed its net loss to 364.37 million yuan last year, it was still among the list of top loss-making H share companies. Meanwhile, Nanjing Panda Electronic, which makes television sets and mobile telecommunications systems, will dispose of its loss-making television-making assets to its parent Nanjing Panda Electronic Group. Television and video compact disc manufacturing accounted for about 80 per cent of the company's total turnover in both last year and the previous year. But the company's television business lost 596.72 million yuan in 1998 and 61.31 million yuan last year amid fierce competition in an industry plagued by severe over-supply. It is one of the five largest television-makers in the mainland but its ranking has slipped in the past two years due to weak new product development and inventory build-up. In exchange for the disposed assets, its parent will inject assets relating to the manufacture and sale of telecommunications and information terminal products and electro-mechanical products, as well as HK$51.9 million in cash. The assets to be injected comprise Shenzhen Jinhua Group and NPMEP Group. Shenzhen Jinhua makes video telephones, set-top boxes and distance supervision systems. NPMEP is a maker of 'high-tech electro-mechanical unity products' including backflow welding equipment and automated production lines. The two companies recorded net profits totalling 13.22 million yuan and 11.49 million yuan respectively. Nanjing Panda Electronic said it would use the HK$51.9 million cash as working capital. Tianjin Bohai shares rose 2.85 per cent to close at 70 HK cents while Nanjing Panda jumped 38.64 per cent to HK$1.66.