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Months ago, the Chinese insurance bellwether was reported to take over a 100% stake in XJ Group, the parent of XJ Electric, thus to indirectly control a 29.90% stake in Shenzhen- listed XJ Electric, via its trust arm China Ping An Trust & Investment Co., Ltd.
However, the regulator does not allow local trust firms to make industrial investments with fixed-assets.
Because of stiff competition, rising production cost and financial strain, XJ Electric in the first half of this year achieved a 7.16% increase in its revenues from main business but suffered a sharp decrease of 40.29% in its net profits. From April to October, the price of XJ Electric's Shenzhen-traded shares even dropped 75%, from CNY 23.56 each to CNY 5.83 a share.
Days ago, Ping An forecasts that it might suffer losses in the first three quarters this year, due to its investments in Fortis.
As the parent company of Ping An Life, Ping An Property, Ping An Health and Ping An Annuity, Ping An disclosed that the four subsidiaries totally reaped original premiums of CNY 99.21 billion in the first nine months this year with respective premiums of CNY 77.41 billion, CNY 20.76 billion, CNY 24 million and CNY 1 billion in the period.
As of June 30, 2008, Shenzhen-based Ping An totally held 121 million shares in Fortis, a leading financial group in Europe, at an initial cost of CNY 23.874 billion.
On October 14, when Fortis resumed stock trading after ten days' suspension, its share price went down 80% from the previous trading day to EUR 1.22 per share; and in last Friday's trading, the share price was even lower than EUR 1 per share.
Up to now, Ping An has seen about 100% decrease in its investments into Fortis, with not more than CNY 1 billion left only.
Stung by the news, the Yuan-denominated shares of Ping An on October 17 was CNY 26 apiece, the record low, and the Hong Kong dollar-denominated shares was down 7.31% to HKD 35.5 each.
(USD 1 = CNY 7.83)
From www.nanfangdaily.com.cn, Page 1, Monday, October 20, 2008 info@SinoCast.com
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