China Resources Profit Triples on One-Time Gain, Beer

China Resources Enterprises Ltd., the state-controlled retailer and brewer, said profit almost tripled in the first six months because it sold its Hong Kong gas station unit and sales from beer and retailing gained.

Net income rose to HK$3.74 billion ($480 million), or HK$1.56 a share, from HK$1.27 billion, or 54 Hong Kong cents, the Hong Kong-based company said in a statement to the city's stock exchange Wednesday. Sales rose 11 percent to HK$35.2 billion.

China Resources booked a one-time gain of HK$2.39 billion from the HK$4 billion sale of its Hong Kong petroleum distribution unit to China Petroleum & Chemical Corp. China Resources Snow Breweries Ltd., its venture with SAB Miller Plc, last month agreed to buy stakes in four Chinese breweries for 596 million yuan ($79 million).

"More acquisitions of breweries and supermarkets are expected to boost its market share and support profit growth," Solomon Chuen, a Hong Kong-based analyst at Quam Ltd., said before the figures were announced. "The expansion of other core businesses - retailing, food and brewing - can cover the earnings gap caused by the sale of the oil business."

Oil distribution and the operation of gas stations in Hong Kong, the group's biggest source of revenue and profit in 2006, declined 13 percent in the first half of this year to HK$10.6 billion as the company planned to discontinue the business.

Snow beer

China Resources said beverage division profit gained 55 percent to HK$118 million. It sold 2.37 million kiloliters of its Snow beer, 82 percent more than a year earlier. The brand accounted for more than 70 percent of beverage sales.

"The group will continue to grow its production capacity through acquisitions, investments in greenfield breweries and capacity upgrade of existing breweries," the statement said. It had about 50 breweries in China on June 30, producing 9 million kiloliters a year.

Profit from retailing -- mainly supermarkets and branded fashion -- rose 86 percent to HK$273 million on Chinese consumers' growing wealth. China Resources holds a 51 percent stake in Esprit Holdings Ltd.'s 750-store distribution network in China.

It has benefited from an 18 percent jump in the disposable income of urban Chinese to 7,052 yuan in the first half, according to China's National Bureau of Statistics.

Meat Processing

Food processing and distribution, including meat sourcing, slaughtering and processing, generated a profit of HK$224 million, up 4.7 percent. China Resources said it expects the operating environment to be "challenging" as the price of pork has risen, peaking at a 10-year high in July.

China Resources still has a "favorable position" after unit Ng Fung Hong Ltd. lost its monopoly on supplying live hogs to Hong Kong from the mainland.

"The impact is limited because it also sells meat in other parts of China, such as Shenzhen" in the industrialized south of the country, Quam's Chuen said.

The diversified company is also involved in the textile business and property investment.

The company declared an interim dividend of 15 Hong Kong cents, compared with 14 Hong Kong cents a year ago.