China Gas Holdings (HKG:0384) Upgraded on Looming Take-Over

  on May 08 2012 3:03 AM

China Gas Holdings (HKG:0384) was turned up a notch as Beijing Enterprises Group boosted its stake in the fuel supplier for the second time in five days to become its No2 shareholder.

LTN www.livetradingnews.com Asia's leading economic research house thinks BEG's move will put further pressure on China Petroleum & Chemical Corp (HKG:0386), or Sinopec, and ENN Energy (HKG:2688) to boost their hostile joint takeover bid worth HK$16.7 billion. HCM one of the best performing fund managers in Asia see the price rising further over the next few days.

BEG, the state-owned parent of Hong Kong-listed Beijing Enterprises Holding (HKG:0392), snapped up 161.8 million shares sold by ADB yesterday at HK$4.10 each to raise its stake to 12.65 percent, according to the Securities and Futures Commission.

The biggest China Gas shareholder is Fortune Oil Plc with 16.12 percent.

I have no idea who sold their stake to BEG. But the deal reflects the fact that more investors recognize our value, China Gas president Eric Leung Wing- cheong told The Standard.

On Thursday, BEG had bought 237.6 million China Gas shares from Oman Oil, also at HK$4.10 apiece.

The Sinopec and ENN bid works out to HK$3.50 per share, and the pair have played down the possibility of any hike.

China Gas has consistently opposed the offer as opportunistic and as failing to reflect the company's true value.

Sinopec and ENN have extended their acquisition deadline three times as they await anti-trust sanctions from the mainland commerce ministry.

Sinopec and ENN would have to raise their offer to at least HK$4.10 per share in order to win the deal, said an analyst who declined to be named. The price of HK$4.10 basically reflects the company's value.

The participation of BEG further increases the chances of a bidding war, UBS said. The Swiss brokerage also raised China Gas to buy from the previous neutral, boosting its target price to HK$4.50 from HK$4.

Before the BEG move, the battle for China Gas had already intensified with another key shareholder - South Korea's SK Holdings - raising its stake through secondary market purchases.

Shares gained 4.1 percent to HK$4.06 yesterday - a 17-month high - while the benchmark Hang Seng Index fell 2.6 percent to 20,536.65.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service

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