Len­ovo sells JV stake for HK$1.7b

New Straits Times - - Business -

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.

BLOOMBERG PIC

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.

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