Sinofert Holdings

Expectation of acquisitions sees Sinofert shares surge

PUBLISHED : Tuesday, 13 February, 2007, 12:00am
UPDATED : Tuesday, 13 February, 2007, 12:00am

Sinofert Holdings, the mainland's largest fertiliser importer, saw its shares surge 7.73 per cent yesterday to a record on speculation that the company's long-awaited plan to buy its parent's assets would take place soon.

Shares in the Hong Kong-listed unit of Sinochem Corp, the mainland oil and chemical conglomerate, closed at HK$4.32 with a hefty transaction volume of HK$188.92 million.

The stock has gained 31.7 per cent over the past 10 trading days.

A company spokesman said there was no timetable for the acquisitions.

A media report yesterday said they would happen soon at a price tag of two billion yuan.

The company had said it planned to buy stakes in three firms from Sinochem Corp in three to four years after it completed the purchase of its parent's fertiliser business in a HK$5.05 billion deal two years ago.

The planned acquisitions included 18.49 per cent of A-share listed potassium fertiliser maker Qinghai Salt Lake Potash, 40 per cent of urea and methanol producer Tianji Sinochem Gaoping Chemical Engineering and 60 per cent of complex fertiliser maker Sinochem Shandong Fertiliser.

Analysts said the reported acquisition price was unlikely to be accurate, given that the Qinghai Salt Lake stake alone was worth 4.22 billion yuan at yesterday's market close.

Qinghai Salt Lake Potash yesterday unveiled a 57.4 per cent increase in net profit for last year to 811.92 billion yuan as turnover surged 62.9 per cent to 2.58 billion yuan.

'The market price of the company's only product, potassium chloride, has continued to trade at a high level,' the company said in a statement to the Shenzhen stock exchange. 'As China relies on imports for two-thirds of its potassium fertiliser needs, the company expects market prices to remain high.'

Qinghai Salt Lake shares have jumped 113.3 per cent in the past 12 months.

'[Sinofert] share price has been driven by speculation,' an analyst at an Asian brokerage said.

'I personally think [the acquisitions] will not happen that quickly.'

He said management had earlier indicated that it applied for China Securities Regulatory Commission approval to buy its parent's stake in Qinghai Salt Lake and hoped it would receive the green light by September.

Management had also indicated they would buy the Tianji Sinochem and Sinochem Shandong stakes only when their profits improved, he added.

They had not fully commenced operation in mid-2005, according to a Sinofert shareholders circular.

Fertile pickings

Sinofert would buy stakes in three firms from its parent

Its shares have gained 31.7pc over the past 10 trading days

Fertiliser importer says prices will remain high