Honk Kong: Shares in China Resources have risen 17 percent in November 06 on strong Q3 2006 data

Shares in retail-focused conglomerate China Resources Enterprise Ltd. surged 7 percent to a post-1997 high November 22 after the leading Chinese consumer play reported strong third-quarter results, Reuters announced November 22.

In its unaudited financial and operational review for the third quarter and the nine months ended 30 September 2006 which was released November 21, China resources Enterprise said consolidated turnover for the third quarter and the nine months ended 30 September 2006 amounted to approximately HK$18.0 billion and HK$49.6 billion respectively, representing an increase of 27% and 25% over the same periods of last year.

Profit attributable to the Company’s shareholders for the third quarter of 2006 rose 4% to HK$630 million whereas that for the first nine months of 2006 rose 1% to HK$1,895 million. Excluding the after-tax effect of revaluation of investment properties and major disposals, which led to an aggregate gains of HK$407 million in the first nine months of 2006 and HK$583 million in the same period of 2005, underlying net profit increased by 16% for the first nine months of 2006. Core consumer businesses contributed to the strong underlying profit growth, especially from retail, beverage and food.

There was encouraging profit increase in retail business with earnings contribution for the third quarter and the first nine months of the year amounted to HK$29 million and HK$176 million respectively, representing an increase of 13.8 times and 65% over the same periods in 2005.

The company said beverage business continued to deliver superior performance. Earnings for the third quarter and the first nine months of 2006 was HK$151 million and HK$226 million respectively, reflecting a year-on-year increase of 16% and 19%. Sales volume of beer rose by 32% to 4.35 million kiloliters for the first nine months of 2006, underpinned by an outstanding organic growth of 25%. Company’s national brand “SNOW” recorded a 91% sales volume growth to 2.43 million kiloliters during the same period, constituting 56% of the total sales volume.
The tremendous growth this year has reinforced its position as the largest beer brand in the mainland and the top ten globally in terms of sales volume.

There was strong result in food processing and distribution business in the third quarter, leading to an overall 22% underlying net profit increase for the first nine months of 2006 to HK$335 million.
Turnover of the Group’s investment property portfolio, which comprises mainly retail properties, increased by 15% and 16% for the third quarter and the first nine months of 2006 respectively. Its
respective underlying net profits of HK$170 million and HK$387 million for the third quarter and the first nine months of the year were comparable to those of last year.

The operating environment of its textile business remained challenging and earnings contribution for the third quarter and the first nine months of 2006 amounted to HK$13 million and HK$54 million, a decrease of 47% and 33% from the same periods in 2005.

China Resources Enterprise, Limited is listed on the Hong Kong Stock Exchange and is also traded on SEAQ International of the London Stock Exchange. It is one of the constituent stocks of the Hang Seng Index in Hong Kong and Hang Seng London Reference Index. The Group focuses on the consumer businesses in both the Chinese Mainland and Hong Kong, with core activities being retail, beverage, food processing and distribution, textile and property investment.

Shares in China Resources have risen 17 percent this month, beating the Hang Seng Index's near 6 percent rise and a gain of 13 percent in the index for Chinese companies listed in Hong Kong . ($1=HK$7.786=7.863 Yuan)

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