Yanjing Brewery, China's third-biggest brewer and also one of the core assets of Beijing Enterprises Holdings, will raise 1.8 billion yuan to finance its regional expansion plan.

Li Fucheng, chairman of the board and general manager of Yanjing Brewery, said 900 million yuan of the fund will be raised from internal resources of Beijing Enterprises Holdings and Yanjing Brewery.

Another 900 million yuan will be gathered from the A-share market. The beer company has received an official approval from China Securities Regulatory Committee for its new shares placement plan.

Li, however, said it may not be a good time to step into the A-share market. "A shares have been dropping a lot recently. If it continues to fall, we will ask our big shareholders to buy all the shares instead," Li said.

Li also added that the capital raised will be spent on expanding the malt production bases in Inner Mongolia and Xinjiang. It will also be used to build 13 beer production plants around China. Only 60 percent of the plants have been ready.

"We expect the expansion of production plans will be completed in March 2009, so that our beer production volume and sales volume can jump to 6.41 million kiloliters and 5 million kiloliters respectively," Li said.

The overall sales volume of beer products soared 6.2 percent to 2.06 million kiloliters in the first half, Li said.

"We hope to reach 450 million kiloliters by the end of this year," Li said, adding that China is a high potential market for the beer industry and he is confident about the company's development.

Yanjing Brewery, the second-biggest growing business of Beijing Enterprises Holdings, surged 39.6 percent to HK$123 million in its first-half net profits due to the higher growth in premium products, effective cost control, and appreciation of the yuan.

(HK Edition 09/18/2008 page2)