China Travel International Investment Hong Kong, a Beijing-backed travel agency, is to spend HK$300 million on setting up an online travel unit after unveiling a turnaround net profit for the first six months of the year. The red chip said it posted a record first-half net profit of HK$500.53 million, or 11.83 HK cents per share, compared to a net loss of HK$290.93 million a year ago when its operations were badly hit by the Sars outbreak.
Management said it would float the new unit on the Nasdaq in about four years. "This online travel company is for real. It's absolutely not a travel website that's packaged as a company. It's a comprehensive business platform," said vice-chairman and general manager Shen Zhuying, adding he hoped to have the new unit up and running this year.
Executive director Michael Ng said the new unit could replicate the success of Shanghai-based online travel agent Ctrip.com International, which debuted on Nasdaq in December to a warm welcome from investors.
China Travel's turnover, of which more than half was generated in China, jumped 53.42 per cent to HK$2.04 billion. An interim dividend of 5 HK cents was declared.
A one-off revaluation surplus of HK$175.77 million, mainly from its hotel properties, also boosted the bottom line. It suffered from a revaluation deficit of HK$388.6 million in the interim period last year.
"This is the best first-half result we've ever had," Shen said. "Amid the improvements in the tourism and commercial environment in Hong Kong and the extension of the individual traveller permit scheme, the number of visitors to Hong Kong from the mainland will continue to grow in the latter half of the year."
Shen was confident that the planned relaxation for mainlanders to travel to 12 European countries that signed the Schengen treaty starting in September would expand its revenue.
China Travel, which has 12 travel agencies on the mainland, saw its travel unit contribute earnings of HK$217.32 million in the first half, from a loss of HK$160.61 million a year ago.
The company's hotel arm was also a star performer, contributing a HK$217.32 million profit, against a loss of HK$128.46 million.
The average occupancy rate of its four hotels in Hong Kong was 89 per cent.