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Beijing Enterprises, which has transformed itself into a utility and infrastructure play through restructuring, will invest 3 to 4 billion yuan to further expand its natural gas, water treatment and beer-production operations.
The move is made as the red-chip company of continues to dispose of non-core businesses, including information technology and winery business.
The company acquired piped-gas operations of Beijing Gas in the first half of 2007.
Piped-gas operations contributed HK$339 million in net profits, accounting for 35 percent of the company's net profits.
"I hope Beijing Enterprises, with its enlarging scale and projects with Datang and PetroChina, will become the largest natural-gas producer by sales and volume in China in four to five years by consolidating its position in Beijing and expanding in Bohai Rim," said Chairman Yi Xiqun.
Beijing Gas will continue to consolidate its operations, according to Zhou Si, vice-chairman and the president of Beijing Gas.
Beijing Gas, the largest natural gas distributor in Beijing, sold 3.4 billion cubic meters in 2007 with operating revenues of HK$6.91 billion.
The company will spend around 2 billion yuan in natural gas operation, expanding its pipeline network and enlarging transmission capacity in order to cope with the growing demand in the country's capital city and Bohai circle.
Zhou said Beijing Gas has already sold 1.8 billion cubic meters of natural gas in the first quarter and estimates that the total volume may reach 4.5 billion cubic meters this year, up 23 percent from 2007.
Besides, the company will spend 300 million yuan to acquire a 60 percent stakes in Shandong Zhongyuan Gas.
It has gotten the approval to inject 1.86 billion yuan for 33 percent equity in Inner Mongolia Datang International Keqi Coal-based Gas Company, in which Datang International holds a 51 percent stake.
The total investment will be 18.78 billion yuan. It is expected to start operating in 2010 with a planned output of 4 billion cubic meters of natural gas per annum, Zhou added.
For water treatment operations, Beijing Enterprises has completed an 800-million yuan acquisition of Shang Hua.
The company plans to use it as a platform to raise funds for future investment and new projects.
The company's net profits before exceptional items from water treatment operations are HK$154 million, accounting for 15.9 percent of the net profits. Toll road operations contributed HK$309 billion or 31.8 percent of the net profits. Beer production business, through its flagship Yanjing Brewery, reaped HK$168 million, or 17.4 percent, of the net profits.
The beer sales grew strongly by 23 percent to HK$6.74 billion. The company will spend 700 million yuan to expand its production facilities this year.
The company's revenue went up 60 percent to HK$11 billion and net profits increased 325 percent to HK$1.4 billion as the company booked HK$404 million in gains from disposing of non-core businesses.
Its overall gross profits margin decreased from 33.6 percent to 27.8 percent, dragged by the lower margin of natural gas distribution.
Yi said the company will continue to dispose non-core businesses, which account for only a very small part of the company. There is, however, no plan to dispose of the profitable Yanjing Brewery.
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