Net Loss Frightens Away Institutional Investors

On 15 Oct 2008, the company released its 3Q 2008 Report. Macro controls of the state coupled with the sluggish real estate market have resulted in a net loss of RMB 213,600 for the company, a 100.42% falloff from a year earlier. This development is in direct contradiction to its projected increase of between 50% and 100% made earlier. In fact, the company's net profit for the first three quarters in 2008 was only RMB 235 mln, also a 100.42% dive from a year earlier, and the net cash flow used in operating activities was RMB 1.33 bln. This figure plummeted 6,383.84% YOY, with an EPS of RMB 0.464.

Against the background of a tumbling stock market, the company's holding interests in other listed companies showed a considerable backslide: by the end of the third quarter, share prices of Shenzhen Changcheng Investment Holding (000042), Wuhan Department Store Group Co., Ltd. (000501) and Bank of Communications (601328) had all fallen. The company's financial assets available for sale had shrunken 69.84% to a mere RMB 119.77 mln.

According to the company, a major cause for its decline in performance is the continuously sinking real estate market in Shenzhen. Although the company has taken a series of measures to promote its sales, revenue continues to be lower than expected.

The section of the 3Q 2008 Report on institutional investors states that other than ETF SZ 100 (159901), which purchased 1.91 mln shares of the company, Penghua Value Advantage Eq (LOF) sold 4.27 mln shares, and Lion Balance Fund and New Century Select Dividend both dropped out of the top ten shareholders of the company.


Source: National Business Daily

Date: 15 Oct 2008

CN01/NW/DM/NK/KM