Hainan Airlines Co will acquire financial assets from its parent to boost its capital, the Shanghai-listed carrier announced yesterday.
The airline will pay HNA Group 595 million yuan (US$80.5 million) for 29.77 million shares of China Merchants Securities Co, accounting for 0.92 percent of the broker's total shares, at 20 yuan apiece, according to a statement filed with the Shanghai Stock Exchange.
Hainan Airlines has the right to adjust the price based on an initial public offering price of the broker if it goes public within one year on the mainland stock market, the statement said.
The Shenzhen-based brokerage has applied to the regulator to launch an IPO. It hopes to sell shares publicly as early as the end of this year to tap the current bullish market sentiment.
The broker earned a half-year net profit of 2.4 billion yuan in 2007, compared with 1.1 billion yuan for the whole of last year. It has total assets of 19.6 billion yuan and 52 outlets nationwide.
HNA Hotels & Resorts Holding Company, a HNA unit, will also transfer 284 million shares of Hebei International Trust & Investment Co to the airline at 2.92 yuan each, accounting for 39.14 percent of the trust company's total shares.
Hebei International Trust, which will be renamed to Bohai International Trust & Investment Co Ltd, also owns 21.25 million shares of China Merchants Securities Co.
"Investments in brokerages are profitable in the next couple of years as the domestic stock market is still in a bull run, and many brokers are planning an IPO," said Zhang Xin, an analyst of Guotai Jun'an Securities.
The statement also said the Hainan-based airline plans to transfer part of its assets to its parent at 378 million yuan, including several properties worth 48.11 million yuan.
The carrier will lease three planes to newly formed Grand China Airlines for a year at a monthly rent of US$500,000 each, the statement said.
Grand China Airlines, the country's fourth biggest, was inaugurated in November by consolidating operations of Hainan Airlines, Xinhua Airlines, Chang'an Airlines and Shanxi Airlines under a newly created parent group, Grand China Airlines Holdings Co.
(Shanghai Daily December 13, 2007)
