Citic rolls the realty dice
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State-owned investment company Citic Group expects real estate to be the mainstay for non-financial businesses and will consider listing its realty unit soon, Chairman Kong Dan said on Thursday.
Speaking at a news conference at the ongoing National People's Congress, Kong said the group's real estate unit, Citic Real Estate, posted a net profit of 1 billion yuan in 2009 thanks to the surging property market. The unit, however, contributed only 5 percent to the group's combined net profit, which stood at 18.6 billion last year.
"The proportion of real estate in the group's overall business mix will go up in our medium-term development plan," said the chairman.
Citic is also planning to sell shares of its real estate unit in an initial public offering to fund the expansion of its property business, he said.
However, the chairman said the listing of Citic Real Estate would largely depend on market conditions, adding the company does not have a fixed timetable for the float, nor the amount to be raised.
"For the short term, the stock markets do not provide good opportunities," Kong said.
He also declined to say whether the offering would be made on the mainland or overseas markets.
Citic Group, the country's largest investment conglomerate owned by the central government, is currently ranked 415 in terms of revenue among the top 500 global firms listed by Fortune magazine last year.
It posted a gross profit of 35 billion yuan in 2009, a 35.4 percent year-on-year growth thanks to the sound performance of its financial services, real estate and project contracting businesses.
Total assets and net assets of the group stood at 2,139.9 billion yuan and 134.8 billion yuan last year, up 31.2 percent and 23.1 percent respectively from the previous year, the chairman said.
Kong said the company would also abide by the government directive to reduce executive payments.
Citic Group will also set up a coordination unit to manage and better utilize the group's assets, Kong said.
It will also step up overseas expansion through its Hong Kong arms, including Citic Pacific in which the group holds a 58 percent stake and Citic Ka Wah Bank, a fully owned subsidiary of Citic International Financial Holdings, in which Citic Group has a 70 percent stake.
The Hong Kong-based Citic Pacific last year received a $1.5 billion bailout from Citic Group after losing $1.6 billion from wrong bets on the Australian dollar. Larry Yung, one of China's wealthiest businessmen, stepped down as chairman of the Citic Pacific last year, while his children left the company following the losses.
"The crisis exposed some out-of-control management problems. It is still a good company," said Kong.
Citic Pacific rebounded to an annual profit of $767 million for the 12 months ended December, the Hong Kong-listed firm said in a bourse filing.
"Citic Pacific's business will become more focused, and its prospects will now be even better," said the chairman.
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