STOCKWATCH: China Travel lower as general decline outweighed asset buy news

HONG KONG (AFX-ASIA) - China Travel International Investment Hong Kong Ltd shares were lower as the broader market decline outpaced any positive impact from the company's announcement it has agreed to acquire assets from parent China Travel Service (Holdings) Hong Kong for 1.911 bln hkd, dealers said. 	    At 11:03 am, China Travel International was down 0.03 hkd or 2.80 pct at 1.04 hkd on volume of 1.33 mln shares.	    The Hang Seng Index was down 421.01 points at 12,733.43.	    China Travel fell "because the market was down, and the company was not heavily traded," a dealer said.	    Raymood Jook, who covers China Travel International at UBS Warburg, said he welcomes the company's asset acquisition deal.	    "The restructuring is positive, with the company shifting bank to its core tourism businesses," he said.	    He said investors in general do not favour a diversified portfolio of the company in the past, with an unclear business development focus.	    "The assets (which the company will acquire) may not present high growth at times, but they will have steady growth, while the parent has agreed to buy back from the company its loss-making toll road business," Jook said.	    China Travel International earlier said it will acquire China Travel Service (Hong Kong) Ltd, a 62 pct stake in China Travel Net Ltd, and Hotel Grandeur Macau from the parent.	    Under the same agreement, China Travel International will sell its 40 pct stake in China Travel Roads & Bridges JV Investment to the parent.	    The company will pay about 1.181 bln hkd in cash and issue 600 mln hkd worth convertible bonds at a conversion price of 1.1308 hkd to the parent for the acquisition.	    The balance of 130 mln hkd will be settled by the disposal of the China  Travel Roads & Bridges.	    Jook said he expects the company to report a 2000 net profit of 197 mln hkd, compared with 250.13 mln hkd a year earlier.	    The company reported a six-months to June net profit of 120.07 mln hkd, with sales at 1.40 bln hkd.	    Jook said he has a 'buy' recommendation on the stock, with a price target of 2.00 hkd. 

Related stock : (NIL)