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China developer Kaisa makes US$332m investment in biopharma firm

[HONG KONG] Kaisa Group Holdings Ltd on Wednesday said it planned to spend US$322 million buying 19 per cent of blood products firm Zhenxing Biopharmaceutical & Chemical Co Ltd, as the once-troubled Chinese property developer continues to diversify.

Kaisa earns over 90 per cent of revenue from property but is active in a range of industries such as tourism and technology, and has businesses up and down the healthcare supply chain.

The group made headlines when it was unable to report 2014 earnings after authorities blocked the sale of some of its properties. That lead to it becoming the first Chinese property developer to default on offshore bonds.

With its debt restructured and sales block lifted, it recovered to post record contracted property sales last year, exceeding its last reported sales in 2013 by about 25 per cent.

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On Wednesday, Kaisa said unit Shenzhen Shipping Health Technology Co Ltd would buy an 18.57 per cent stake in Zhenxing Biopharmaceutical from Zhenxing Group Co Ltd for 2.19 billion yuan (S$446.5 million), funded through internal resources.

The audited consolidated net asset value of Zhenxing Biopharmaceutical, which produces human serum albumin and human immunoglobulin, was 546.9 million yuan at the end of 2016.

"The acquisition represents a good investment," Chairman Kwok Ying Shing said in a statement. "Income from the sales of blood products ... will create sustainable returns for the company's shareholders and expand the company's presence in the healthcare industry, which in turn will facilitate industry diversification and enhance industry synergy." The group has said it expects to return to profit in 2017.

Earlier this month, it recorded total contracted property sales of about 4.36 billion yuan for October, up 16.9 per cent from the same month a year earlier.

Its share price was down 1.9 per cent at the end of morning trade, compared with a 0.4 per cent fall in the benchmark Hang Seng Index. Shares of Zhenxing Biopharmaceutical were up 2.8 per cent.