China Resources Enterprises' (CRE) recent purchase of a controlling stake in Sichuan's largest brewer will accelerate its expansion in the mainland's brewery market, according to analysts. However, they said the purchase was unlikely to give an immediate boost to the bottom line of the red-chip conglomerate. On Tuesday, CRE said its subsidiary CRE Beverage had agreed to set up a new venture with the Blue Sword Breweries Group. Blue Sword is the largest brewer in Sichuan with 10 breweries, 900,000 tonnes of capacity and sales of more than 500,000 tonnes last year, according to BNP Paribas Peregrine. CRE said it would own 62 per cent of the joint venture and the investment would cost about HK$500 million. 'The joint venture will further enhance CRE Brewery's position as one of the leading brewers in China,' BNP Paribas said. CRE already owns two Sichuan breweries, Mianyang and Leshan, with a total capacity of more than 250,000 tonnes. Keith Li, associate director of Daiwa Institute of Research, said that the purchase was reasonable given the profitability and market position of Blue Sword. Blue Sword had a profit of about 100 million yuan (HK$93.7 million) last financial year, according to analysts. It has one billion yuan of debt. Mr Li said the brewery division accounted for only a small portion of CRE's net profit and he expected the deal would not give an early boost to the company's bottom line. The brewery division was estimated to account for 8 per cent of CRE's net profits and it was expected to grow to almost 10 per cent following the deal, he said. In a separate development, an official of Yunnan province said CRE's parent, China Resources Holdings, controlled by the Chinese Foreign Trade Ministry, planned to invest in a brewery plant in Dali. China Resources Holdings also has an investment interest in a hydro-electricity plant in Yunnan province. The official said Citic Pacific also planned to take a stake in a coal-related project in the province that is estimated to be worth 10.4 billion yuan, according to local Web site infocastFN.com.