Bloomberg
Suning Appliance Co., China’s biggest electronics retailer by market value, will buy Citicall Retail Management Ltd. to gain 22 stores in Hong Kong and a platform for expansion overseas.The Nanjing, east China-based company plans to increase Citicall’s outlets to 50 within three years, President Sun Weimin told reporters in a conference call yesterday. Suning will pay as much as HK$215 million for the acquisition which will be completed by March, he said.
The purchase gives Suning control of its first outlets outside mainland China and pits the retailer against Gome Electrical Appliances Holdings Ltd., the Beijing-based chain that also has stores in Hong Kong. The city’s retail sales rose by the most in 16 months in November from a year earlier as falling unemployment and buoyant stock and property prices encouraged consumer spending.
“Hong Kong is a suitable platform for Suning to gain access to overseas markets,” Sun said. “Our entry into Hong Kong will also allow us to take Chinese brands outside the country.”
Suning will pay up to HK$180 million for Citicall’s inventory and assets and HK$35 million for its brands and network, according to a statement to the Shenzhen stock exchange yesterday after the market closed.
Nanjing-based Suning in June agreed to pay 800 million yen ($8.7 million) for a 27.4 percent stake in Japanese household appliance and computer chain store Laox Co. Suning has the option to raise its holding to 29.3 percent between January 2010 and January 2013.
Real Estate
Citicall will focus on its real-estate business after selling the electronics operations to Suning, Managing Director Norman Tam told reporters.
Suning shares closed 0.7 percent lower at 20.60 yuan in Shenzhen yesterday. Its shares have risen 73 percent this year compared with a 116 percent gain for the Shenzhen Composite Index.
The electrical-appliances retailer said yesterday it raised 3 billion yuan ($439 million) in a private sale of 177.6 million shares at 17.2 yuan each to seven investors including Stanford University.
Suning had 885 stores in China as of Sept. 30, compared with rival Gome’s 742 outlets.
Suning on Nov. 2 forecast its net income for 2009 may rise 25 percent to 40 percent from the 2.17 billion yuan it earned in 2008. Third-quarter profit rose 15.4 percent to 704.8 million yuan.
“We know that Hong Kong is a very competitive consumer market for us,” Sun said. “Hong Kong people have high spending power and they are sophisticated, high quality consumers.”
To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net
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