CRE plans stake in Zhengzhou gas firm
China Resources Enterprise (CRE) is in talks to buy a stake in piped-gas supplier Zhengzhou Gas Holdings, the blue-chip conglomerate's latest attempt to move into the fledgling but lucrative industry.
The potential deal could bring a financially sound shareholder to Zhengzhou Gas, which is listed on the Growth Enterprise Market and has a piped-gas supply monopoly in Zhengzhou.
But the deal has led to uncertainty about China Resources' expansion plans. The State Council-backed conglomerate is also focused on growing its mainland supermarket chains and apparel distribution networks.
ING Financial Markets analyst Cusson Leung said: 'If China Resources goes ahead with the Zhengzhou Gas purchase, it will cause confusion on its expansion strategies.'
CRE shares rose 15 cents or 1.77 per cent yesterday to finish at $8.60. Zhengzhou Gas climbed one cent to 77 cents.
Zhengzhou Gas said yesterday that talks were in the preliminary stages while the number of shares to be sold and the acquisition price were not discussed.
Foreign investors such as blue chip Hong Kong and China Gas, Xinao Gas Holdings, Panva Gas Holdings and Wah Sang Gas Holdings have made a strong push into the mainland.
CRE recently tested the waters by sealing a US$20 million project in Suzhou. The project, 70 per cent-controlled by the blue chip, will supply natural gas to a Suzhou industrial zone for 50 years.