Shanghai Industrial Holdings, the Hong Kong-listed flagship of eastern China's economic hub, plans to divest its semiconductor and dairy units to focus on its core businesses after posting 7 per cent profit growth for last year. Chairman Teng Yilong said the company might swap its 8.21 per cent stake in listed Semiconductor Manufacturing International Corp (SMIC) with its parent Shanghai Industrial Group's 'quality assets'. 'Such assets can be the parent's land reserve and other well-run businesses,' Mr Teng (right) said yesterday, without elaborating. SMIC last week reported a worse than expected net loss of US$440.23 million for last year, ballooning from a net loss of US$19.47 million in 2007. It booked a US$105.8 million loss from asset impairment and lower sales due to the transition from dynamic random access memory chip to logic production in Beijing and a market slump in the fourth quarter. 'As Shanghai Industrial is answerable to public shareholders' interest, we will sell our SMIC stake, but this asset has strategic value to the government,' Mr Teng said. 'We will balance our interest and our parent's interest [in the transaction].' Another asset targeted to be sold is a 35.17 per cent stake in Shanghai-listed Shanghai Bright Dairy & Food. The melamine food safety scare last year led the dairy products maker to post a net loss of 286 million yuan. On the timetable for the planned asset sales, Mr Teng expects some progress before the end of the year. The disposal of non-core assets is part of an ongoing restructuring of many red chips - mainland government investment arms in Hong Kong, most of which are considered overly diversified. Shanghai Industrial considers the infrastructure, property and water businesses to be its core operations. Yesterday, it posted a 7.1 per cent rise in net profit last year to HK$2.1 billion from HK$1.96 billion in 2007. The result is in line with analysts' HK$2.15 billion mean estimate. The company recorded a profit of 614 million yuan (HK$696.46 million) from two toll roads linking Shanghai to Nanjing and Hangzhou. Its water business had a net profit of HK$53.28 million, up 187 per cent from 2007, while profit from its various medicine units rose 51.4 per cent to HK$264 million. Its consumer products units fell 50 per cent to HK$488 million. A final dividend of 36 HK cents was proposed, taking the full-year payout to 81 HK cents.