(Yicai Global) May 18 -- Shares of Chinese fashion retailer Youngor Group fell after the firm said it will use a rare market exit method by donating some CNY1.4 billion (USD200 million) worth of hospital assets to the government of its hometown.

Youngor’s stock price [SHA: 600177] dropped by 3.4 percent to close at CNY7.04 (USD1). The shares are almost 5 percent down in value in the past 12 months.

The retailer's net profit could be reduced by around CNY1 billion (USD148.2 million) in 2022 due to the donation to the Ningbo government, the manufacturer of men's clothing said in a statement yesterday. However, the plan still needs to be submitted to the company’s general meeting of shareholders for consideration.

The owner of brands Youngor and CEO is trying to cut its losses by getting rid of the assets, Beijing Business Today reported today, citing Deng Yong, a professor of law at the Beijing University of Chinese Medicine. Moreover, the method of donation can offset a large amount of taxes, Deng added.

Youngor entered the healthcare sector in 2015 by establishing a medical industry fund. In October 2018, the firm started building Puji Hospital which was finished recently. Moreover, the company said in 2020 it is planning to build a retirement home close to the facility in Ningbo.

Youngor has recently revealed divestitures in other areas to focus its efforts on its main garments business. The firm intends to sell its 1.3 percent stake in PipeChina United Pipeline for nearly CNY3.4 billion, it announced on May 5.

The reasons are linked to expertise. The domestic and foreign economic situation has become more uncertain in recent years, the firm explained. The company lacks a team and experience in the medical industry, it added.

If Youngor continues to invest in Puji Hospital and related assets, its input and output may show a large imbalance, which is not conducive to gathering capital and energy to develop its main business, it concluded.

The retailer is not unprofitable. Youngor made CNY4.4 billion in net profit last year, up 41 percent from a year ago. Its revenue climbed 19 percent to CNY13.6 billion (USD2 billion).

Editor: Emmi Laine, Xiao Yi