http://infopub.sgx.com/FileOpen/China%20...leID=23100
Key Points:
i) The Sellers are PRC nationals primarily engaged in the commercial real estate sector in the PRC.
ii) From the appraisal of GCAL based on generally accepted valuation procedures and practices,
the fair value1 of 100 per cent. of the shareholding interest in the Target and Jiurui Expressway
Co (the “Target Interest”), which comprises 100 per cent. of the equity interest in the Target
and Jiurui Expressway Co and the Target Shareholder’s Loan, is approximately RMB702 million
(approximately HK$885.2 million) as at 31 March 2014.
iii) Over the period from 2002 to 2013, the average growth in Gross Domestic Product of Jiangxi
Province, PRC is more than 17 per cent. per annum3. It is anticipated that strong economic
growth will continue and will remain the major portion of the area’s economic development. In
addition, the road passenger traffi c demand of Jiangxi Province, PRC had increased at the rate
of 8.0 per cent. per annum from 2002 to 2013, while the road freight traffic demand increased at
the rate of 18.1 per cent.
iv) Pg 16 & 17 - ensuring discharge of guarantees on a loan to a related vendor property worth RMB$150m, securing the paperwork from local government confirming extension of toll period from 2033 to 2040 and ensuring receivables and collectibles are in order
v) Sharing of Toll Collection Increment. (a) the Toll Collection Increment (less applicable taxes) on or before 31 March 2014 (if any)
shall belong to the Sellers;
(b) the Toll Collection Increment (less applicable taxes) for the period from 1 April 2014 to 31
March 2024 (if any) shall be shared equally between CMHP and the Sellers; and
© the Toll Collection Increment (less applicable taxes) on or after 1 April 2024 (if any) shall
belong to CMHP.
vi) Net Loss. Based on the audited consolidated fi nancial statements of the Target for FY2013,
the net loss before tax, minority interests and exceptional items of the Target for FY2013 is
approximately HK$27,839,047.
Based on the audited consolidated fi nancial statements of the Target for 1Q2014, the net loss
before tax, minority interests and exceptional items of the Target for 1Q2014 is approximately
HK$13,020,599.
vii) The Company understands from Jiurui Expressway Co
that the toll collection revenue of the expressway has seen a year-on-year increase since its
commencement. Toll collection revenue was RMB1,728,002 in 2011, RMB30,156,219 in 2012
and RMB56,638,397 in 2013. For 1Q2014, toll collection revenue was RMB19,341,875.
viii) RATIONALE FOR THE ACQUISITION - Pg 26 - 27
Conclusion:
This revived acquisitions looks highly likely to be a "forced sale" by vendor that appears to be over-exposed to the plunging Chinese real estate. Toll revenue growth appears to be on a exponential growth curve and hence only huge interest expenses are dogging the lucrativeness of the toll road.
Unfortunately, the details of the loans and interest expenses are no longer available in the circular. Hence one can only deduce that CMP do not wish to publicise their ability to restructure the capital structure of a toll road held by weak owners in the light of recent economic and political developments in China.
Just wait for the magic from CMP to deliver the accretiveness of the acquisition.
Vested
GG
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