Hong Kong, Dec 23, 2011 - (ACN Newswire) - Sinopec Kantons Holdings Ltd ("Kantons" or the "Company"; together with its subsidiaries (the "Group"); Stock Code: 934), is pleased to announce through its wholly owned subsidiary of the Company, Sinomart KTS Development Limited to sign an agreementof acquiring the equity interest in the Five Crude Oil Terminal Operators ("Five Joint Ventures") from China Petroleum & Chemical Corporation ("Sinopec Corp.") at an aggregate consideration of RMB1,809,807,300. The Company also proposed to raise capital by the way of rights issue in order to finance the acquisition and increase authorized share capital. The management of Kantons considers the terms and conditions of the acquisition and the acquisition agreements to be in the interest of the Company and the Shareholders as a whole.
Analysis of the Total Purchase Price
According to the letter from the Independent Financial Adviser, the implied price-to-book ratio (the "PBR") of Five Joint Ventures for this acquisition is 1.1 times, lower than which of the average ratio of comparable transactions and average ratio of peer companies. The PBRs of the comparable transaction (sale and purchase of terminals in the PRC involving Hong Kong listed companies in the past five years) range from 0.9 times to 6.1 times, with an average of approximately 2.0 times and those of the peer companies range from 0.6 to 2.8 times with an average of approximately 1.3 times. The Implied PBR of the acquisition of the Five Joint Ventures is within therange of the PBRs and lower than the average PBR of the comparable transactions and within the range of the PBRs and lower than the average PBR of the peer companies.
Meanwhile, the implied price-to-earnings ratio (the "PER") of Five Joint Ventures for this acquisition is 9.9 times, lower than the average ratio of the comparable transactions and the average ratio of peer companies. The PERs of the comparable transaction 3.6 times to 31.6 times, with an average of approximately 16.1 times andthose of the peer companies range from 7.3 times to 25.3 times, with an average of approximately 13.5 times. The Implied PER of the acquisition of the Five Joint Ventures is within the range of the PERs and lower than the average PER of the comparable transactions and within the range of the PERs and lower than the average PER of the peer companies.
Reasons for and benefitsof the proposed Rights Issue
Compared with other possible fund raising venues, the proposed Rights Issue is considered to be fair and reasonable and in the interest of the Company and the Shareholders as a whole, as the exercise provides opportunities for the Shareholders to maintain their stakes in the Company and enjoy the anticipated benefits from the Acquisition.
Financial effects of the Acquisition and the proposed Rights Issue on the Group
Upon completion of the Acquisition and the proposed Rights Issue (Assuming a maximum of 1,036,830,000 Rights Shares are issued under the proposed Rights Issue), the profit for the year attributable to the Shareholders would increase from approximately HK$195.7 million to approximately HK$419.0 million, representing an increase of approximately 114.1%. The Group's equity attributable to the Shareholders would increase from approximately HK$2.60 per Share to HK$2.99 per Share, representing an accretion of approximately 15.0%. Besides, Earnings per Share would increase slightly from HK18.9 cents to HK20.2 cents and the gearing of the Group would improve from current 42.7% to 24.5%.
Copyright 2011 ACN Newswire. All rights reserved.
Analysis of the Total Purchase Price
According to the letter from the Independent Financial Adviser, the implied price-to-book ratio (the "PBR") of Five Joint Ventures for this acquisition is 1.1 times, lower than which of the average ratio of comparable transactions and average ratio of peer companies. The PBRs of the comparable transaction (sale and purchase of terminals in the PRC involving Hong Kong listed companies in the past five years) range from 0.9 times to 6.1 times, with an average of approximately 2.0 times and those of the peer companies range from 0.6 to 2.8 times with an average of approximately 1.3 times. The Implied PBR of the acquisition of the Five Joint Ventures is within therange of the PBRs and lower than the average PBR of the comparable transactions and within the range of the PBRs and lower than the average PBR of the peer companies.
Meanwhile, the implied price-to-earnings ratio (the "PER") of Five Joint Ventures for this acquisition is 9.9 times, lower than the average ratio of the comparable transactions and the average ratio of peer companies. The PERs of the comparable transaction 3.6 times to 31.6 times, with an average of approximately 16.1 times andthose of the peer companies range from 7.3 times to 25.3 times, with an average of approximately 13.5 times. The Implied PER of the acquisition of the Five Joint Ventures is within the range of the PERs and lower than the average PER of the comparable transactions and within the range of the PERs and lower than the average PER of the peer companies.
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PBR (times) PER (times)
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Comparable Peer Comparable Peer
transactions companies transactions companies
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Minimum 0.9 0.6 3.6 7.3
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Maximum 6.1 2.8 31.6 25.3
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Mean 2.0 1.3 16.1 13.5
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The acquisition 1.19.9
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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 PBR and PER for the comparable transactions and peer companies.Reasons for and benefitsof the proposed Rights Issue
Compared with other possible fund raising venues, the proposed Rights Issue is considered to be fair and reasonable and in the interest of the Company and the Shareholders as a whole, as the exercise provides opportunities for the Shareholders to maintain their stakes in the Company and enjoy the anticipated benefits from the Acquisition.
Financial effects of the Acquisition and the proposed Rights Issue on the Group
Upon completion of the Acquisition and the proposed Rights Issue (Assuming a maximum of 1,036,830,000 Rights Shares are issued under the proposed Rights Issue), the profit for the year attributable to the Shareholders would increase from approximately HK$195.7 million to approximately HK$419.0 million, representing an increase of approximately 114.1%. The Group's equity attributable to the Shareholders would increase from approximately HK$2.60 per Share to HK$2.99 per Share, representing an accretion of approximately 15.0%. Besides, Earnings per Share would increase slightly from HK18.9 cents to HK20.2 cents and the gearing of the Group would improve from current 42.7% to 24.5%.
Copyright 2011 ACN Newswire. All rights reserved.
© 2011 JCN Newswire
