Sichuan Changhong Electric, one of China's largest television makers, and two other companies will invest US$225 million to set up a joint venture for the production of flat-screen panels. Sichuan Changhong will invest US$90 million for a 40 per cent stake in the venture, Sichuan Hongou, while sister company Sichuan Century Shuanghong will spend US$95 million for 42.22 per cent. MatlinPatterson Global Opportunities Partners, a private equity firm from the United States, will pay US$40 million for a 17.78 per cent stake. Sichuan Hongou would manufacture mid- to high-end plasma display panel (PDP) television monitors, Sichuan Changhong said. Sichuan Changhong is increasing investment in flat-screen panel production as more consumers shun traditional televisions using cathode-ray tubes. 'The digitisation of television globally brings huge opportunities in flat panel displays. By investing in PDP manufacturing, the company will strengthen its flat panel television technology and improve profitability,' Sichuan Changhong said. In October, Sichuan Changhong and Irico Group Electronics, a Hong Kong-listed maker of television tubes, said they would jointly invest 1.8 billion yuan in an 80-20 joint venture, called Century Shuanghong Display Devices, to produce plasma display panels. Earlier this month, this joint venture bought 75 per cent of South Korean panel maker Orion PDP for US$99.9 million. Sichuan Changhong's financial performance deteriorated this year, with tighter cash liquidity and rising debt levels, according to a report by Xinhua Finance. 'In the first half, it was in a position of negative cash flow, mainly as a result of rising inventories,' it said. During the first half, Sichuan Changhong's gross debt jumped 80.7 per cent to 2.49 billion yuan from 1.38 billion yuan last year, while its gross debt to total capital ratio rose to 21.6 per cent from 12 per cent last year. Revenue rose 7.9 per cent to 7.79 billion, while net profit plunged 41.9 per cent to 125.3 million yuan as competition forced the company to cut prices. However, Sichuan Changhong's third-quarter net profit soared 94.49 per cent to 96 million yuan while turnover jumped 46.2 per cent to 4.4 billion yuan, thanks to strong demand for flat televisions. Sichuan Changhong's share price rose 0.7 per cent to 4.22 yuan yesterday.