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Investors endure long wait for China profits

Friday 11th July 2003

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With a portfolio of New Zealand commercial construction, an aquarium in Beijing and a leather tannery in Shanghai, Richina Pacific is one of the more interesting listed companies.

Adding much colour is Richard Yan, whose US-based investor consortium owns 51.2%. The labyrinthine international structure through which the shares are held has embroiled Mr Yan in a British Virgin Islands court case brought by two other large investors, one of them investment banking giant JP Morgan.

Richina's basic problem is a lack of profitability and its plan is to address this by pumping money into the Shanghai venture. The China operations will soon be held in a "China Holding Company," with a Chinese government licence that stipulates its capital must be boosted by $20 million in 18 months' time.

This shouldn't be difficult. Richina recently raised $10.4 million in a rights issue and took in $26 million cash from the sale of a Wellington property.

To overcome the problems of reporting in New Zealand dollars while doing business in the US variety, the company will start reporting in both currencies and has signalled a shift to a main listing in Singapore.

In the meantime the company is not setting the market alight with its trading results. Last year it made a net profit of $8.2 million and it has downgraded its profit for 2003 to $6.5 million.

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