Digital China May List Computer Services Unit, Chairman Says

Digital China Holdings Ltd. (861), the country’s biggest distributor of technology products, is in talks with banks about a possible listing of the company’s computer services unit, Chairman Guo Wei said.

The possible spin off of the division probably won’t be completed the year to March 31 as the company seeks to increase the scale of the business, Guo said in an interview in Hong Kong today, without providing details of the banks. The company is reviewing where it will list the unit, he said.

Digital China, which sells products for companies including International Business Machines Corp. (IBM) and Apple Inc. (AAPL), will increase investment this year to develop computer services based on cloud technology. The Beijing-based company also plans to accelerate development of a business that issues electronic cards to residents of Chinese cities, including Wuxi, that store users’ personal data and allow online payments.

The company plans to invest about HK$1 billion ($128 million) in the “Sm@rt City” business, which includes the electronic cards operations, this fiscal year, Guo said. Some of the funds will be used for acquisitions of technology companies, he said.

Digital China rose 2.8 percent to HK$13.06 at the 4 p.m. close of trading in Hong Kong, while the city’s benchmark Hang Seng Index declined 0.7 percent.

The company yesterday reported profit rose 22 percent to HK$1 billion in the year ended March 31. Sales in the computer services division, which offers software and consultancy services, rose to HK$6 billion, or 11 percent of total revenue.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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