China's Wuliangye to buy spirits assets from parent
SHANGHAI, Feb 28 (Reuters) - Wuliangye Yibin (000858.SZ), a maker of traditional Chinese spirits, or "baijiu", will buy more than 6 billion yuan ($842 million) of liquor-related assets from its parent over the next three years, the company said on Thursday.
As an initial step, Wuliangye needs 1.9 billion yuan of funding in 2008 to acquire assets from state-owned Wuliangye Group, it said in a filing with the stock exchange.
The stock slumped 3.9 percent in morning trade, underperforming the market benchmark's .SSEC 1 percent fall, as investors had been hoping it would acquire the assets sooner.
"Investors are disappointed that the asset injection will take so long, although the move would eventually make the company more transparent," said Guo Changsheng, analyst at Shanghai Securities Co.
Wuliangye also announced on Thursday that 2007 profit jumped 25.8 percent to 1.47 billion yuan, even as sales dipped 0.9 percent to 7.3 billion yuan in value and slumped 48 percent in volume.
The results reflected Wuliangye's strategy, adopted last year, of focusing on high-margin premium brands and shedding low-end products, as Chinese spirits makers battle rising raw material costs and fierce competition.
Wuliangye, based in China's southwestern Sichuan province, competes with Kweichow Moutai Co (600519.SS) and Sichuan Swellfun Co (600779.SS) in the country's baijiu market.
The three control a combined 70 percent of the high end of the baijiu market, while China's overall baijiu market is crowded with more than 30,000 players.
Despite price hikes for its products, Wuliangye has been struggling to meet rising demand from increasingly quality- and brand-conscious consumers.
The company will spend about 800 million yuan to build five new logistic centres to expedite deliveries, the statement said.
China's wine and spirits consumption is expected to grow 13 percent annually until 2011, according to market research company International Wine and Spirit Record. (US$1=7.1186 Yuan) (Reporting by Samuel Shen; Editing by Edmund Klamann)
