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. Ms Fan said the dividend decision was not unexpected, as company management had mentioned the possibility after divesting its HKCB stake. However, the size of the payout was below market expectations. CRE management was under pressure to make clear what the company planned to do with its nearly HK$9 billion in gross cash after selling the bank. It will record a book loss of HK$320 million on the HKCB sale next year. Analysts said although CRE had indicated it would buy textile and logistics operations from its parent China Resources Group, investors were concerned about the quality of the assets. 'Going forward, CRE's performance will be driven by its acquisitions,' said Ms Fan. She was hopeful the company could negotiate a guaranteed return on assets with its parent. The price of the textile business is said to have been lowered to about HK$1.4 billion from HK$2 billion - another reason why it could afford to pay a special dividend, according to analysts. The acquisition could be concluded before the year-end.