China Hainan Express to buy stake in bus operator

SHANGHAI, Dec 20 (Reuters) - Hainan Expressway Co (000886.SZ) said on Thursday it had agreed to buy 30 percent of a major bus operator in China's southern island of Hainan, where tourism is booming, for 128.1 million yuan ($17.4 million) in cash.

Hainan Expressway, which operates highways and also has tourism and real estate businesses, said the stake in Hainan Haiqi Transportation Group would help it to diversify revenues and develop transport-related activities.

Haiqi Transportation, owned by the local government, is restructuring. Hainan Expressway said it would raise its stake in Haiqi Transportation if the bus operator's return on net assets reached 7 percent after six months to a year of operations.

Hainan Expressway, which made a net profit of 12.28 million yuan and operating profit on core business of 75.54 million yuan last year, said it estimated Haiqi Transportation would make an operating profit of 31.30 million yuan this year. ($1 = 7.38 yuan) (Reporting by Andrew Torchia; Editing by Edmund Klamann)