SYS-CON MEDIA Authors: Pat Romanski, Liz McMillan, Elizabeth White, William Schmarzo, Yeshim Deniz

News Feed Item

Sinopec Kantons Announced the Acquisition of Five Oil Terminal Operators from Sinopec Kantons and Proposed Rights Issue

A Vital Step for Sinopec Group to Practice Internal Resource Integration
Generally Supported by Stock Analysts and Commentators

Hong Kong, Dec 29, 2011 - (ACN Newswire) - Sinopec Kantons Holdings Ltd ("Kantons" or the "Company"; together with its subsidiaries (the "Group"); Stock Code: 934) is pleased to announce that it signed an agreement of acquiring the equity interest in the Five Crude Oil Terminal Operators ("Five Joint Ventures") from China Petroleum & Chemical Corporation ("Sinopec Corp.") to help Kantons to achieve its strategy to become the largest crude oil terminal business player in China and one of the largest in Asia. This is the first capital operation directed by Mr. Fu Chengyu, Chairman and Secretary of the Party Committee of China Petrochemical Corporation ("Sinopec Group") after his transfer from China National Offshore Oil Corporation ("CNOOC").

During the time in CNOOC, as Chairman,CEO and General Manger, Mr. Fu Chengyu has led CNOOC to complete several overseas mergers and acquisitions, providing him with affluent experience of capital operation. It is believed that the asset injection of Sinopec to its one and only red chip listed subsidiary is a vital step for Mr. Fu Chengyu to practice internal resource integration in Sinopec Group, to optimize and to foster a new capital platform.

The acquisition not only embodied Sinopec's determination to strengthen and expand Kantons, but also created a milestone for Kantons' future development. First, the acquisition will rapidly expand the number and capacity of crude oil terminals controlled or jointly owned by the Group. In consideration of the continuous increase in the size of international oil carriers, there are sharp requirements for the water depth at the shore. Deepwater shore is regarded to be rare resources in China coastal area. By acquisition, the number of crude oil terminal companies controlled or jointly owned by the Group will increase from two to seven, and the number of berths with the capacity to accept VLCC vessels will increase from two to nine. This represents a significant importance for the Group to dominate especially the deepwater shore resources.

Second, the acquisition will remarkably consolidate the core business competitive advantages of Kantons. Upon the acquisition, the crude oil terminal business of Kantons will cover East China, North China and South China, which are the most prosperous areas with the fastest growth in terms of energy demand in China. This geographical distribution operates in coordination with the location of Sinopec's oil refineries. In addition with the assistance of the existing oil pipelines,Kantons will have privileged position in the China crude oil terminal business.

Third, the acquisition will substantially increase Kantons' core business competitiveness. Upon the acquisition, the annual design capacity of crude oil terminal companies controlled or jointly owned by the Group will increase from approximately 85 million tonnes to approximately 225 million tonnes, rendering Kantons position to become the primary crude oil terminal platform in China, and progressively in Asia.
Forth, this acquisition will be favorable to promote Kantons' profitability. For the first nine months ended 30th September, the Five Joint Ventures recorded total net profit of approximately RMB289 million. Net profit attributable to Kantons will account to RMB157 million upon completion of acquisition. Moreover, as Ningbo Shihua's 2nd phrase terminal and Rizhao Shihua's terminal are currently still in trial operation stage, with the continuously growing demand for crude oil in China, the fulloperation of crude oil terminal and the increase of freight handling capacity of terminals, it is anticipated that the profitability of the five crude oil terminal Joint-Venture companies will further enhanced.

The management of Sinopec Group support and expect to reposition Kantons as a world-class petrochemical warehousing and logistics company. It is foreseen that the development of Kantons will not be stopped. Since Kantons is the one and only red chip listed company of Sinopec in Hong Kong, Sinopec Corp is thus anticipated to fully utilize Kantons as the red chip stock financing platform. This will bring Kantons red chip advantageous financing function into full play, accelerating the step to construct the overseas petrochemical warehousing and logistic. Moreover, this will serve as a fundamental support for Sinopec's internationalized operation.

In regard to this acquisition and proposed rights issue, response from the market is generally positive. In the view to the immediate and potential return on investment from the 5 Joint-Venture crude oil terminal companies soon to be acquired by Kantons, the investment sector conceives with optimism. Mr. Mark To, Head of Research at Wing Fung Financial Group Limited, expressed, 'the net profit of the 5 acquiring companies was RMB364 million in aggregate. Given part of the terminals are in trial operation stage, it is expected the profitability will be further enhanced once fully operational. Among the 5 companies, Kantonswill acquire 90% of the equity of Caofeidian Shihua, while 50% for the other 4. Conservatively speaking, the historical price-to-earnings ratio (the "PER") of the acquisition was around 10 times, in regard to Kantons' historical PER of more than 20times, the acquisition term is reasonable.'

Mr. Kingston Lin, Director of Research at Fulbright Securities has mentioned the acquisition and said, 'the proposed rights issue will raise an amount of around HKD2.5-3.5 billion, primarily served as acquisition capital for the 5 Joint-Venture crude oil terminals. The target acquisition price is around HKD2.1 billion. This shows that the purpose of right issue is chiefly for the acquisition terms. The remaining sum will serve as daily operation capital. This signifies the Company's confidence to boost the profitability by means of acquisition. Meanwhile, given the stable financial performance from the daily operations, in addition with the sizable figure of net income margin (50% in average for Qingdao Shihua, Tianjin Port Shihua and Ningbo Shihua in 2010), the forecast earning performance of the Company is henceforth expected to be enhanced considerably.'

Mr. Simon Lam, Director of Research Department at Christfund Securities, commented, 'proposed rights issue is favorable to Kantons' development prospect. The locations of the terminals to be acquired are around the Bohai Economic Rim and the Yangtze River Delta. Those regions are undergoing rapid economic growth, meanwhile located adjacent to oil refineries of numerous provinces. This allows a prestigious advantage in the market development strategy.'

Mr. Patrick Poon, Head of China Business Division at Haitong Securities, stated, 'The current import of crude oil in mainland is still growing continuously in accordance to the trend of GDP growth. The accumulated import growth for the first 11 months is 6.1%, representing rooms for development in respect to the demand for terminal services and storage.'

There is also a column suggested, 'this acquisition of equity of 5 terminals is sufficient to multiply the earnings for Kantons. Therefore, the diluted earning per share will not be affected after the proposed rights issue. With the circumstances of discountedprice, proposed rights issue is worth to get involved.'

Please refer to the announcement and circular published on the Hong Kong Stock Exchange and the company website for more detail information regarding on the acquisition and rights issue.

About Sinopec Kantons Holdings Limited

Sinopec Kantons Holdings Limited is a whole owned subsidiary of China Petroleum & Chemical Corporation ("Sinopec Corp."), mainly engaged in logistics and trading, with two subsidiaries: Sinomart KTS Development Limited and Kantons International Investment Limited. The principal activities of the Companies are: operating crude oil loading, storage and transmission facilities in the PRC and trading of petroleum and petroleum products. According to the strategic development plan of warehousing and logistics business, Sinopec Group Company repositioned Kantons as a world-class petrochemical warehousing and logistics company. Sinopec Group Company will strengthen and expand its international petrochemical storage business through Kantons. As the only red-chip company of Sinopec currently listed in Hong Kong, Sinopec Kantons Holdings Limited is a key representation of Sinopec's diversified capital.


Source: Sinopec Kantons Holdings Limited

Copyright 2011 ACN Newswire. All rights reserved.

More Stories By ACN Newswire

Copyright 2008 ACN Newswire. All rights reserved. Republication or redistribution of ACN Newswire content is expressly prohibited without the prior written consent of ACN Newswire. ACN Newswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
In today's always-on world, customer expectations have changed. Competitive differentiation is delivered through rapid software innovations, the ability to respond to issues quickly and by releasing high-quality code with minimal interruptions. DevOps isn't some far off goal; it's methodologies and practices are a response to this demand. The demand to go faster. The demand for more uptime. The demand to innovate. In this keynote, we will cover the Nutanix Developer Stack. Built from the foundat...
New competitors, disruptive technologies, and growing expectations are pushing every business to both adopt and deliver new digital services. This ‘Digital Transformation’ demands rapid delivery and continuous iteration of new competitive services via multiple channels, which in turn demands new service delivery techniques – including DevOps. In this power panel at @DevOpsSummit 20th Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, panelists examined how DevOps helps to meet the de...
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
As Enterprise business moves from Monoliths to Microservices, adoption and successful implementations of Microservices become more evident. The goal of Microservices is to improve software delivery speed and increase system safety as scale increases. Documenting hurdles and problems for the use of Microservices will help consultants, architects and specialists to avoid repeating the same mistakes and learn how and when to use (or not use) Microservices at the enterprise level. The circumstance w...
Sold by Nutanix, Nutanix Mine with Veeam can be deployed in minutes and simplifies the full lifecycle of data backup operations, including on-going management, scaling and troubleshooting. The offering combines highly-efficient storage working in concert with Veeam Backup and Replication, helping customers achieve comprehensive data protection for all their workloads — virtual, physical and private cloud —to meet increasing business demands for uptime and productivity.
"NetApp's vision is how we help organizations manage data - delivering the right data in the right place, in the right time, to the people who need it, and doing it agnostic to what the platform is," explained Josh Atwell, Developer Advocate for NetApp, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
"Cloud computing is certainly changing how people consume storage, how they use it, and what they use it for. It's also making people rethink how they architect their environment," stated Brad Winett, Senior Technologist for DDN Storage, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
While the focus and objectives of IoT initiatives are many and diverse, they all share a few common attributes, and one of those is the network. Commonly, that network includes the Internet, over which there isn't any real control for performance and availability. Or is there? The current state of the art for Big Data analytics, as applied to network telemetry, offers new opportunities for improving and assuring operational integrity. In his session at @ThingsExpo, Jim Frey, Vice President of S...
A look across the tech landscape at the disruptive technologies that are increasing in prominence and speculate as to which will be most impactful for communications – namely, AI and Cloud Computing. In his session at 20th Cloud Expo, Curtis Peterson, VP of Operations at RingCentral, highlighted the current challenges of these transformative technologies and shared strategies for preparing your organization for these changes. This “view from the top” outlined the latest trends and developments i...
Rodrigo Coutinho is part of OutSystems' founders' team and currently the Head of Product Design. He provides a cross-functional role where he supports Product Management in defining the positioning and direction of the Agile Platform, while at the same time promoting model-based development and new techniques to deliver applications in the cloud.
"We were founded in 2003 and the way we were founded was about good backup and good disaster recovery for our clients, and for the last 20 years we've been pretty consistent with that," noted Marc Malafronte, Territory Manager at StorageCraft, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In their Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, and Mark Lav...
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin, ...
@CloudEXPO and @ExpoDX, two of the most influential technology events in the world, have hosted hundreds of sponsors and exhibitors since our launch 10 years ago. @CloudEXPO and @ExpoDX New York and Silicon Valley provide a full year of face-to-face marketing opportunities for your company. Each sponsorship and exhibit package comes with pre and post-show marketing programs. By sponsoring and exhibiting in New York and Silicon Valley, you reach a full complement of decision makers and buyers in ...