JP Morgan Chase & Co. was likely to be the buyer of a 10 percent stake of the parent group of China Yantai Changyu Pioneer Wine Co., the China Securities Journal reported Friday, citing an unnamed source.

The report follows the Chinese winemaker Thursday saying in a statement the Yantai city government had agreed to transfer a 33 percent stake in its parent company to the investment arm of Italian spirits company Illva Saronno Holding for 481.42 million yuan (US$58.17 million).

The State-owned asset agency of Yantai, a city in eastern Shandong Province, was also seeking to sell a 10 percent stake in Yantai Changyu Group Co. to another foreign investor, the listed company said in the Thursday statement. It didn��t mention names of potential investors.

An executive at JP Morgan Partners Asia, an affiliate of JP Morgan Chase & Co., said Friday the company had a policy of not commenting on press reports.

An official in Changyu Pioneer's securities department Friday declined to say whether JP Morgan Chase was a potential buyer of the 10 percent stake in its parent company or at what price the Yantai government was aiming to sell the stake.

In November, a company, whose name is translated as Yantai Yuhua Investment Development Co. and which is primarily held by Yantai Changyu Group��s senior management and employees, bought a 45 percent stake in the group from the Yantai government for 388 million yuan, according to the China Securities Journal report.

Changyu Group owns a 54 percent stake in Changyu Pioneer in the form of non-tradable State shares, according to Changyu Pioneer's mid-year 2004 financial report published in August.

China's wine market is expanding rapidly alongside a booming economy and a growing middle class. In the first nine months of 2004, Changyu Pioneer��s core revenue rose 26.8 percent year on year to 953.3 million yuan. The company has A shares and B shares listed in Shenzhen.

Source: Shenzhen Daily-Agencies