Shares in China Travel International fell as much as 7.2 per cent yesterday after the company reported a 39 per cent plunge in profit last year on start-up costs and marketing expenses for its hot spring resort in Zhuhai and online travel services. The stock fell to as low as HK$3.48 before ending down 6.1 per cent at HK$3.52. The Hong Kong-listed arm of the state-owned mainland travel service said net profit fell to HK$375 million last year from HK$612.6 million in 2005, as turnover rose 24 per cent to HK$6.98 billion. Profit was less than the mean estimate of HK$506 million in a Thomson First Call poll of four analysts. The company cut its final dividend to one HK cent from three HK cents a year earlier. China Travel said the profit decline was mainly due to start-up costs and marketing expenses for Zhuhai Ocean Spring Resort, which started operation in January last year, and online travel service Mangocity.com, officially launched in March last year. The two businesses generated HK$568 million in turnover last year, but did not contribute any profit, China Travel said. The drop was also partly due to some non-recurring items, including goodwill impairment of HK$17 million, a decrease of HK$38 million in surplus from revaluations of hotels and investment properties last year, and fair value gains on convertible bonds amounting to HK$99 million in 2005. Excluding one-off items, recurring profit for last year also fell HK$84 million or 19 per cent from a year earlier. The red-chip company which operates tourist attractions, golf clubs, hotels as well as passenger transport, freight forwarding and cargo services through subsidiaries, said Zhuhai Ocean Spring Resort and Mangocity.com would be the company's earnings drivers. The Zhuhai hot spring resort attracted three million visitors last year and is expected to continue to grow as the city government is planning to zone a 30-square kilometre site nearby to develop a satellite city for tourism. Mangocity.com has contracts with 3,450 hotels and offers discounted airfares for more than 2,500 routes. It has launched more than 1,000 packages and has about 1.6 million registered members. China Travel said it was planning to integrate its ground agency network with the online platform and other travel resources to increase market share.