China Resources Enterprise (CRE) has proposed distributing part of its cash reserves to shareholders in a move seen as an attempt to regain investor confidence in the firm's financial management.
The red-chip conglomerate, which sold its stake in Hongkong Chinese Bank (HKCB) three weeks ago, said it would pay a special cash dividend of 25 cents a share. The date has yet to be determined and will be conditional upon completion of the bank sale.
The dividend, totalling HK$503.8 million, represents about 28 per cent of the total HK$1.8 billion proceeds it will receive from selling its 35.23 per cent stake in HKCB.
CRE said it had budgeted HK$700 million for expansion in the mainland and would keep the remainder for working capital.
'This is an attempt to address investors' concerns as to how it will utilise its cash holdings,' said ABN Amro analyst Fan Cheuk-wan.
However, the payout was too low to boost CRE's share price, she said.
