Market cap to double for Beijing Enterprises
Parent group to inject assets into listed unit
Beijing Enterprises Holdings, the Hong Kong-listed investment arm of the capital city government, aims to double its market capitalisation in three years with the help of asset injections from its parent company, according to chairman Yi Xiqun.
'Our parent company will continue to inject quality assets into the listed company in the next three years, which could help to boost the market capitalisation of the listed firm,' Mr Yi said in an interview with Caijing magazine.
Zhang Honghai, Beijing Enterprises' vice-chairman and chief executive, yesterday said the company would focus on infrastructure and utilities, including toll roads, water treatment plants and gas.
'We're in talks to buy more assets, not only from our parent, but no timetable or details can be given at this moment,' Mr Zhang said after the company's annual shareholder meeting. He also said newly acquired Beijing Gas would expand outside the capital as well as in upstream and downstream gas businesses.
The red-chip conglomerate in April announced that it agreed to acquire Beijing Gas Group, the city's piped-gas provider, from parent Beijing Enterprises Group for HK$1.16 billion after more than two years of negotiations.
Since the April 11 announcement, the stock has rocketed 42 per cent to close at a nine-year high of HK$28.10 yesterday, about 29 times of this year's forecast earnings.
Based on the closing price yesterday and the company's 623 million shares outstanding, its market capitalisation is HK$17.5 billion.
As long as the share price does not sink, the market cap would be boosted by 65 per cent to HK$28.9 billion upon completion of the deal for the gas network which the listed company is buying in part by issuing 411.25 million new shares to its parent, 39.78 per cent of its enlarged share capital, at HK$18.48 each.
The gas acquisition deal, which already received minority shareholder approval, is expected to be completed at the end of this month.
Beijing Gas is the company's next growth driver, according to a report by BOC International analyst Viola Yip. She forecasts the company's earnings this year will jump 127 per cent to HK$780 million and further increase to HK$1.4 billion next year.
Separately, Mr Yi said Beijing Enterprises Group aimed to boost its total assets to more than 100 billion yuan, without elaborating. He added that the group will expand its business outside the capital.
Beijing Enterprises Group, the largest state-owned group of the municipal government, had total assets of 44.86 billion yuan at the end of last year. It posted a net profit of 453 million yuan last year, according to information it provided when it issued one billion yuan of 10-year bonds earlier this month.
