Convenience Retail Asia, the operator of 205 Circle K stores in Hong Kong, has bought a stake in a franchised chain in Dongguan - a strategy that allows it to speed up expansion without heavy capital commitment. Chief executive Richard Yeung Lap-bun said the firm signed an agreement yesterday to buy a 60 per cent stake in the 80-store Sun High chain. He did not disclose the investment cost or any financial data of Sun High, but said the chain aimed to achieve turnover of 80 million yuan in the next financial year by opening a further 120 franchised stores in south China. He said Circle K would also open another 60 stores in south China to add to the 20 now and expected their turnover to exceed 100 million yuan. 'We aim to become the largest convenience chain in south China over the next three years,' said Mr Yeung, referring to the firm's target of opening 500 stores by 2007. 'It [the acquisition of Sun High] can shorten the learning curve on franchising in China,' he said, adding that as the Sun High chain targeted the low-end market it would help diversify its customer base. Circle K plans to spend more than $83 million opening 40 new stores in Hong Kong and 30 in Macau this year. The company announced that net profit rose 10.29 per cent to $66.95 million for the year to December from a year earlier. A final dividend of 3.75 cents was given, up 25 per cent from a year earlier. Its gross margins rose to 33.1 per cent from 32.6 per cent previously.