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CEFC: Discussions on JVs still ongoing
19 August 2015
Business Times Singapore
CEFC International, the fuel trader whose share price has shot up by more than ten-fold since mid-July, said in an update on Tuesday evening that discussions on its potential joint ventures are still ongoing.
“No definitive terms or formal legal documentation have been agreed, and no binding agreement in relation to the potential joint ventures has been entered into, at this stage,” said CEO and executive director Lu Da Chuan. “Shareholders and potential investors should exercise caution when trading in the shares of the company, as there is no certainty that the potential joint ventures will be agreed or that any similar transaction will materialise,” he said.Mr Lu was previously the manager of the budget analysis and treasury department of PetroChina International, a wholly owned subsidiary of PetroChina, the Chinese oil and gas giant. He became CEFC CEO in February.
He was making the announcement as CEFC’s share price declined for a third day in a row along with reduced volumes, even as more warnings are being sounded about the stock.
The latest cautionary note comes from David Gerald, president and CEO of investor lobby group Securities Investors Association of Singapore (SIAS).
He said retail investors should see “a concern or a red flag” in how CEFC had risen from 2.5 Singapore cents on July 7 to an intraday high of 40.5 cents on Aug 14 without any fundamental change in the company’s business.
Mr Gerald’s statement follows a Singapore Exchange (SGX) advisory on Aug 14 urging caution about dealing in CEFC shares.
SGX’s comments came after the company announced a placement of about 705 million shares at S$0.35 each to raise almost S$250 million.
The money is mainly for the company to expand its trading business, CEFC said. Up to a fifth, however, could be for corporate activities including potential acquisitions and joint ventures.
SGX also noted that buying volume during CEFC’s share price surge from July 10 to Aug 6 was concentrated in a small number of offshore accounts, which accounted for more than 40 per cent of the total traded volume during the period.
On Tuesday, Mr Gerald said he welcomed the various queries and disclosures by SGX.
“SIAS also calls on CEFC, as its duty, to communicate its business strategy and fundamentals to all its investors to enable them to make an informed decision,” it said.
CEFC rallied sharply in mid-July after saying it was in discussions to acquire equity interest in a company that owns a floating storage tank.
It said it was also in discussions with a consortium to acquire equity interest in a company building port facilities and cargo transportation in China.
Earlier in April, the company’s Hong Kong subsidiary set up a joint venture with Rizhao Port Oil Terminal Co to build and operate oil tank storage facilities at the port area in Rizhao city in Shandong, China.
CEFC closed at 34 Singapore cents on Tuesday, down 2.5 cents or 6.8 per cent. It is now valued at S$1.1 billion.