(Yicai Global) Sept. 30 -- Shares in Chinese travel agency UTour Group plunged by the exchange-imposed limit of 10 percent today as a cash injection of CNY385 million (USD56.5 million) from e-commerce giant Alibaba Group Holding failed to shake the prevailing gloom shrouding the tourism sector.

Beijing-based UTour's stock price [SHE:002707] closed at CNY9.11 (USD1.34).

Alibaba China Technology, a unit of Hangzhou-based Alibaba, is buying a 5 percent stake in the tour service provider from the firm's controller Feng Bin at a price of around CNY8.50 (USD1.25) per share, UTour said yesterday.

This should come as welcome relief for UTour whose tour and retail businesses have been badly hit by the Covid-19 pandemic. It posted losses of CNY176 million (USD25.8 million) for the six months ending June 30, compared with profit of CNY110 million over the same period last year, according to the firm’s semi-annual earnings report. Revenue plummeted 78.7 percent to CNY1.2 billion (USD176 million).

UTour is also linking up with another Alibaba subsidiary, Zhejiang Alibaba Travel Investment, to collaborate on products, retail channels and brands, Big Data technology, payment and enterprise management systems, it added.

The two parties will form a joint venture with registered capital of CNY150 million (USD22 million), which will run a distribution platform for tourism products, the company said. Alibaba Travel will hold 55 percent equity and UTour the rest.

Market speculation that UTour may obtain a tax-free business license saw its stock price almost triple in mid-July to CNY12.92 (USD1.90) from the lows of CNY4.50 four months prior. However, once the speculation was denied, the firm's share price shrank back.

Editor: Kim Taylor