China Resources Enterprise (CRE) plans to invest HK$5 billion to develop its retail business over the next three to five years in an effort to become a retail-led distribution company, according to chairman Frank Ning Gaoning. The company also set a retail revenue target of 50 billion yuan (about HK$46.86 billion) per year after 2007. This compared with the HK$4 billion revenue last year, Mr Ning said yesterday. He was speaking at a media briefing where he said net profit for last year plunged 27 per cent to HK$1.2 billion. The decline, in line with the lower end of market expectations, was caused by smaller earnings on property holdings and a fall in contributions from the building materials business. Mr Ning said China's retailing and distribution market remained fragmented compared with other capital-intensive industries but the company hoped to build its own critical mass there. 'We aim to become the largest retailer of consumer goods in China,' he said, adding that retail revenue would be boosted by organic growth and acquisitions. Acquisition targets included buying interests in Shenzhen Vanguard Department Store from its parent China Resources Holdings, which had bought its 72 per cent stake in Shenzhen's leading hypermarkets operator from China Vanke for 457 million yuan last year. Shenzhen Vanguard would open 10 more hypermarkets this year in southern cities such as Guangzhou, Shenzhen and Zhuhai. Mr Ning said CRE would establish a supply chain which would use the company's manufacturing operations in textile or food to supply products to its retailing division. 'We are determined to go towards this direction and will definitely not change the strategy anymore. If the company does not perform well in future, the change will only be the management, not the company's strategy,' Mr Ning said. Early last year CRE pledged to become one of Asia's largest commodity distribution companies with assets in textiles, petroleum and logistics. But the plan to acquire logistics businesses from its parent was aborted by the end of last year. Mr Ning said the group would consider disposing of non-core operations such as petroleum and building materials when the retail-led distribution business was strong enough to give a handsome profit to the company. Separately, Mr Ning said the potential A-share listing of its ultimate holding company China Resources National in the mainland would not have a negative impact on CRE. Mr Ning said the candidate was in the process of turning itself into a shareholding company - a listing prerequisite. The candidate, which indirectly owned Hong Kong assets through CRE, was in discussion with the China Securities Regulatory Commission on listing arrangements, he said. Commenting on last year's financial results, Mr Ning said the core distribution business achieved stable performance but the business was hit by a slow property market that cut building materials earnings 31 per cent to HK$142 million. During the year, the company made a HK$292 million exceptional loss from the disposal of its Hongkong Chinese Bank stake. The beverage business fell 32 per cent to HK$61 million because of start-up losses from newly acquired plants. Property income fell 56 per cent to HK$208 million. Earnings per share was 60 HK cents, down 28 per cent.