SHENZHEN Energy Group Co said yesterday that it plans to buy a stake in one of its sister companies from its parent group as the power firm raises electricity production to meet rising demand.
Shenzhen Energy will buy 59.19 million shares, or 10.8 percent, of Shenzhen Nanshan Power Co from parent Shenzhen Energy Group Corp, it said in a statement to the Shenzhen Stock Exchange.
"The move is part of the group's plan to inject a majority of its quality assets into Shenzhen Energy," said Wu Kewen, an Orient Securities Co trader. "It could help boost profitability in the long term."
Shenzhen Energy didn't specify how much it would pay for the stake. Based on Nanshan's closing price of 4.58 yuan last Friday, the shares were valued at 271 million yuan (US$40 million).
Nanshan's shares halted trading yesterday and will remain suspended till September 2, according to a separate statement by Nanshan. It is hoped that a purchase deal will be clinched before then.
Shares of Shenzhen Energy lost 1.95 percent yesterday to close at 7.56 yuan, against a 4.86-percent decline in the Shenzhen Component Index.
Hong Kong-traded Huaneng Power, China's biggest power producer, last year paid 1.52 billion yuan for a 9.08-percent stake in Shenzhen Energy to become its second-largest shareholder.
Shenzhen Energy Group Corp owns 63.74 percent of Shenzhen Energy.