Lenovo sells JV stake for HK$1.7b
BEIJING: Lenovo Group Ltd will pick up about HK$1.7 billion (RM974 million) from selling out of a developer of property and parking lots in central China, striking the latest real estate deal to shore up earnings battered by shrinking smartphone sales.
The world’s largest personal computer maker struck a deal to sell a 49 per cent stake in the joint venture to a unit of Sunac China Holdings Ltd, the company that’s investing US$2.2 billion (RM9.78 billion) in LeEco.
As part of the deal, Lenovo also gets its hands on 264 million yuan (RM169 million) of the venture’s undistributed profits.
Lenovo’s pre-tax gain was calculated from a sale price of 1.6 billion yuan, net of transaction and other costs. Its shares rose as much as 1.7 per cent to HK$4.75 in Hong Kong.
Lenovo’s mobile-phone business is shrinking, while personalcomputer division manages only anaemic growth in the face of brutal competition. Its profit plummeted more than two thirds in the December quarter, missing analysts’ forecasts, after HP Inc threatened its position in North America.
Smartphone sales fell by almost a quarter globally as Lenovo bled market share to rivals such as Huawei Technologies Co.
The Chinese PC maker has resorted to real estate deals to buttress its working capital, including the sale of a research building, here. It booked a US$206 million gain from property sales in the September quarter, on top of disposals of “non-core assets” in the previous three months.
The deal announced yesterday to sell out of the venture, Chengdu Lian Chuang Rong Jin Investment Ltd, is part of a clutch of property investments Sunac China unveiled the same day.
It mainly built houses, commercial property and parking spaces in two Chinese provinces, said Lenovo.
Lenovo has struck an agreement to sell a 49 per cent stake in a property and parking lots joint venture to a unit of Sunac China Holdings Ltd.