SMRT buys stake in Shenzhen transport firm

SMRT Corp is acquiring a 49 per cent stake in a Shenzhen transport company for 320 million yuan (S$68 million). And through its investment in Shenzhen Zona Transportation Group, SMRT hopes to gain a foothold in China.

Its subsidiary SMRT Hong Kong yesterday signed an agreement to acquire Shenzhen Zoto Investment Co’s 49 per cent equity interest in Zona.

SMRT operates Singapore’s biggest rail network, as well as a fleet of buses and taxis.

SMRT president and CEO Saw Phaik Hwa signed the agreement in Guangdong yesterday with Zoto chairman Wang Yongli. The ceremony was witnessed by Singapore’s Acting Minister for Information, Communications and the Arts Lui Tuck Yew and Guangdong province vice-governor Wan Qingliang.

This is SMRT’s first investment in a Chinese company. Ms Saw said that buying Zoto’s entire stake in Zona will be ‘a beachhead for our expansion into China’.

Zona is a limited liability company that provides taxi services in Shenzhen, car and bus repair services in Shenzhen and Huizhou, car leasing, scheduled coach services from Shenzhen to other cities, tour and chartered coach services within and beyond Shenzhen, and public bus services in Huizhou. Zona also has a 33.5 per cent equity interest in one of only three bus operating companies in Shenzhen.

Zona started with 300 buses in 2002 and has since grown its fleet to 803. It also has 142 chartered and tourist coaches, 78 long-haul coaches, 830 taxis and 260 leased cars in the Shenzhen region.

Based on its audited accounts for the financial year ended Dec 31, 2008, Zona has a net asset value of 376.7 million yuan, represented by negative net tangible assets of 48.0 million yuan and net intangible assets of 424.7 million yuan. The net intangible assets largely comprise taxi operating licences acquired through open bids.

The acquisition by SMRT is not expected to have a material impact on its consolidated net tangible assets or earnings per share for the current financial year.

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