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To: sommovigo who wrote (1926)	5/24/2000 12:12:00 AM
From: StockDung	Respond to of 3392

"cigarettes crimped sales" A tobacco company selling and marketing cyber care. To funny [LatelineNews: 2000-5-3] Hong Kong -- Shanghai Industrial Holdings Ltd. (Shanghai Ind-News) , the Shanghai city government's investment arm, said 1999 profit fell for the first time since its Hong Kong listing four years ago as cigarette sales slumped. The company, which makes and distributes consumer products, said net income fell 12.4 percent last year to HK$1.01 billion ($129.8 million), or HK$1.14 per share. The result fell short of the HK$1.31 per share predicted by an Ibes International poll of 28 analysts. ``It's quite disappointing,'' said Laura Luo, head of China research at SG Securities Ltd. in Hong Kong. ``I was expecting the company to earn HK$1.34 per share.'' Like other Chinese companies such as food retailer Qingdao Dongfang Group Co., Shanghai Industrial's ``Old Economy'' products such as cigarettes and auto parts are lagging behind booming technology-related products such as personal computers, as China catches the Internet bug. The group is ``speeding up its full-scale transformation, using high technology to increase the economic effectiveness of its existing businesses and investing in New Economy industries'' such as cancer-fighting drugs and Internet-related businesses, Chairman Cai Laixing told a press conference. Infrastructure projects, such as the expansion of the Waigaoqiao container port in Pudong, Shanghai's new commercial district, will be another source of income, company officials said. The Shanghai government's control of the company also means Shanghai Industrial is likely to get the first crack at government infrastructure projects such as the city's 8 billion yuan ($964 million) ``cyberport'' technology. Shanghai Industrial shares fell HK$0.10, or by 0.7 percent, to HK$13.95. Shanghai Industrial's sales fell 7.2 percent to HK$3.3 billion and operating profit dropped 12.6 percent to HK$943 million. Its wholly owned Nanyang Tobacco unit reported an 86-percent slump in earnings, as a government tariff on cigarettes crimped sales. Nanyang, maker of the ``Double Happiness'' brand, sells almost half of its cigarettes to Hong Kong-based companies, many of which once smuggled them into mainland China, analysts said. Still, the company said it expects sales to recover, after it released two new brands -- ``Alain Delon'' and ``Wealth'' -- and signed on other cigarette companies in China to help it distribute the new brands. The company also said earnings fell because of provisions for its investments in companies such as Jiangsu Expressway Co. and Zheijiang Expressway Co. Some analysts said earnings growth was also dragged down by amortization costs on roads, including the Shanghai Inner Ring Road and the North-South Elevated Expressway, which it bought in April 1997. ``I don't think the company's businesses are structured to best capture the spending pattern in the China economy,'' SG Securities' Luo said. ``I don't expect its profit to recover in 2000.'' Muzi.com LatelineNews dailynews.muzi.net