Back in December, two large Chinese companies - Sinopec, Asia's largest energy refiner, and ENN Energy, a sizeable gas supplier - bid HK$15.3bn (£1.25bn), or HK$3.50 a share, for China Gas Holdings (CGH). The target is China's largest independent natural gas supplier, supplying gas to over 150 cities. But nine months on and with no apparent time limits, the bid seems no nearer to success.
Following some hectic share buying, a triumvirate including Fortune Oil and associates now claim to own just over half of CGH's shares and await a higher offer or another deal. CGH's shares currently trade at around HK$4.00 against HK$2.80 just prior to the bid.
Fortune Oil's half-year results indicate how important the CGH deal has become to the company. During the period, net borrowings swelled from £5.7m to £63.3m, and at end-June the company and associates owned nearly 19 per cent of CGH, or a total of 837m shares. The money invested in CGH's shares and loans to associated joint ventures totalled £148m, not that far short of the company's market value.
In the first half, Fortune Oil's operating profits rose from £11.8m to £14.3m, thanks to better results from natural gas sales, supplying fuel oil to 15 Chinese airports and an oil terminal. For the full-year, broker Oriel Securities forecasts revenues up from £200m to £232m and adjusted pre-tax profits £3.6m higher at £35.3m.
FORTUNE OIL (FTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 9.25p | MARKET VALUE: | £176m | |
| TOUCH: | 9.06-9.44p | 12-MONTH HIGH: | 12.125p | LOW: 8.25p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 8p* | NET DEBT: | 32 | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 113 | 17.1 | 0.57 | nil |
| 2012 | 88 | 16.4 | 0.55 | nil |
| % change | -22 | -4 | -4 | - |
*Includes intangibles of £52.4m, or 3p a share | ||||
