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Mark O'Neill

The first private entrepreneur to buy an airport during the communist era said yesterday that more local governments could sell their airports and he was considering listing his aviation and tourism assets in Hong Kong.

Last month, Junyao Group chairman Wang Junyao acquired Yichang airport in Hubei province from the local government.

He paid 350 million yuan (about HK$329.84 million) with a promise to spend 200 million yuan more to upgrade the airport, despite the lack of official regulations that allowed such a sale to a private company.

In an interview, Mr Wang described his purchase as an 'experiment'.

'The government is drawing up the regulations for sale of airports to private firms. If such sales are good for the local governments and the companies, then this would absorb private capital,' he said.

The issue remains sensitive, because the government has traditionally regarded airports as strategic assets which must remain in state hands.

'People should not make this issue so complicated, talking about security and loss of state assets,' Mr Wang said.

'We should make a proper evaluation of them . . . people should act in the spirit of Deng Xiaoping, that is, be it black or white, a good cat is one that catches mice.'

The Junyao Group last year posted profit after tax of 200 million yuan on revenue of 3.5 billion yuan - 30 per cent each from aviation and dairy products and 40 per cent from real estate, hotels, taxis and other interests.

It has a debt-asset ratio of 60 per cent, which Mr Wang described as 'reasonable'.

The company operates more than 40 charter routes across China and in August last year paid 126 million yuan for an 18 per cent stake in Wuhan Airline Company, becoming the first private Chinese firm to take a share in an aviation firm.

Mr Wang said he was considering a listing in Hong Kong of his aviation and tourism interests and possibly a domestic listing, although no timetable had been set.

Shanghai real estate is the latest part of the Junyao empire. Last October it spent 350 million yuan to acquire a 32-storey hotel in the Xujiahui commercial district and re-named it the Shanghai Junyao International Plaza, as its corporate headquarters and symbol.

'We could not turn it into a five-star hotel and a three-star hotel has no competitive edge, so we are converting it into a high-class office building. We will use some of it, lease some and sell some,' he said. The conversion, due to be completed in October next year, is costing 200 million yuan.

The group is also investing 450 million yuan in a site in Pudong, on which it will build 60,000 square metres of up-market villas and condominiums for sale and rent to executives of foreign companies.

Mr Wang said he earned a return of 7 to 8 per cent on his dairy business. His milk cartons, carrying the Junyao name and logo, sell in Shanghai supermarkets.



Mainland airport buyer may list in HK