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Et-China.com International Holdings Ltd

  • BY: Andrew Hore |
  • POSTED: 07/06/2009 |

European travel company Kuoni has taken a 31.8% stake in Et-China.com International Holdings Ltd.

The shares have been acquired from Hong Kong-based hedge fund Gandhara Master Fund. Kuoni has the right to nominate one director to the board of the China-focused corporate and consumer travel company. 

The deal enables a share seller to quit the company and a strategic partner to become involved.

Et-China’s revenues grew from £86.5m to £142m in 2008, although that improvement is flattered by exchange rates but the growth was still impressive in RMB. The net loss doubled from £3.4m to £6.9m. There was still cash in the bank of £18.9m at the end of 2008.

Like-for-like revenues were 3% ahead although gross margins improved.

Poor weather in parts of China, the earthquake in Sichuan, visa restrictions during the Beijing Olympics and the weak economic climate are some of the reasons why 2008 was a tough year for Et-China.

The loss was exacerbated by the fall in value of shares in a department store operator.

Since the year end, Beijing Yoee.com Travel has been acquired for RMB5m plus £2.1m worth of shares at a price of 80p each. Part of the share consideration is dependent on performance. The integration of the new business was completed at the end of March 2009.

At 45p a share, Et-China is valued at £14.9m.

The outlook is positive with the Chinese government encouraging travel. Revenues improved 15% in the first quarter of 2009, while gross profit increased by 24%.

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