The share price of red chip China Merchants Holdings (International) (CMHI) plunged 4.8 per cent to HK$5.90 yesterday after it reported a lower than expected net profit of HK$800.21 million. The profit fell well short of the market consensus of HK$996.89 million, according to Thomson Financial First Call's poll of brokerages, and was 8.9 per cent down on the 2000 profit of HK$878.06 million. The disappointing result was mainly due to a provision of HK$100 million for lower than budgeted traffic volume on its 40 per cent-controlled Guiliu toll road in Guangxi province. It also made a HK$39.55 million provision for its failure to collect some annual return guaranteed by its joint-venture partners in the 33.4 per cent-owned Luomei toll road and 16.8 per cent-held Zhangzhou toll road. Management blamed the Guiliu provision on a flood, which affected traffic last year as well as forecasts for this year and 2003. Analysts questioned the timing of the provision, saying the impact of a flood in late 2000 should have been reflected in the company's books much earlier. 'There is no way the company knew about this only recently, unless its joint-venture partner has been hiding it from [CMHI],' an analyst said. CMHI president Fu Yuning said the firm was in talks to sell its stakes in two other toll roads to its joint-venture partners. In 1999, the conglomerate's bottom-line was hit by a failure to collect returns guaranteed by its joint-venture partner in the Guiliu Expressway. This prompted China Merchants to sell half its then 80 per cent stake in the joint venture and led to a revised profit-sharing agreement. The analyst said CMHI's bargaining power in selling its toll road stakes to its partners may be low, given Beijing's high-profile discouragement of once-popular guaranteed profit arrangements. CMHI's ports operation resulted in a 16.9 per cent growth in net profit to HK$594.1 million last year, offsetting a 92 per cent fall in net profit from its toll-road business to HK$13.8 million. It hopes to invest HK$2 billion in mainland ports development, including HK$500 million on phase two of the Shekou container terminal in western Shenzhen and possibly other projects in Tianjin and Shanghai.