A very healthly company with great prospects but vastly undervalued and seems to be held in disdain by the markets probably due to the fact that the majority of the company is in private hands and yes, what it owns and how it is going to get value form it is a mystery....There should be large divi's from its investments but no mention of them yet.. how long is a piece of string?
With respect no I probably don't know enough about it. Basically followed broker recommendation with a very small punt after a quick read around. (Not my normal strategy)
I do find the china gas situation very confusing and never really got my head round who owns what and I believe there is still a lot of uncertainty around that. I've also read about the different ways business is ran. I'd also read articles on their website http://www.fortune-oil.com/en_us/our_company.htm etc
Aside from that just wondered if anyone had any targets based on their own and others research which is clearly greater than mine. The broker ratings don't seem to be very forthcoming.
Non-cash Impairment Loss on Armenian Iron Ore Project
Fortune Oil (LSE: FTO.LN) announced in its Interim Management Statement on 19 November 2013 that it was continuing to determine whether the Armenian iron ore assets could be developed economically. The Company stated that the rail costs continued to be the major issue which was undermining the commercial viability of these projects. As a consequence, Fortune Oil expects to recognise a non-cash impairment loss in the Armenian iron ore project in its 2013 full year results.
The Company has completed an extensive assessment of the Armenian project during 2013. The impairment is a result of increased transportation costs to move the iron ore concentrate from the mines in Armenia to the Georgian Black Sea port of Poti, and softening of the long term iron ore prices predicted when the Armenian iron ore assets could enter commercial operations. The Company will not make any material investment in the development of this project unless there is an economically viable investment case. Nevertheless the Company will continue to evaluate options to improve the economics of the Armenian iron ore assets and is working with the Armenian authorities and the Armenian and Georgian rail companies to determine if this is possible.
Based on the unaudited consolidated accounts at 30 June 2013, the value of the total asset was US$46 million, excluding those recoverable assets such as cash & bank and a loan receivable from a minority shareholder and the impairment is expected to be the full carrying value of the Armenian iron ore project. The final figures will be included in the Company's 2013 full year results.
Fortune Oil's underlying business and balance sheet remain in good health and the Company is taking decisive action to resolve the issues which the Armenian iron ore project faces.
China Gas in talks to buy 2 billion yuan of projects from parent Thursday, 28 November, 2013, 10:18am China Gas, the mainland’s largest city gas distributor, is in talks to buy a 2 billion yuan city gas portfolio from its biggest shareholder, Beijing Enterprises Group, according to sources with the companies. At stake is the portfolio of some 20 city gas projects state-owned Beijing Enterprises Group operates in provinces such as Shandong, Hebei and Xinjiang, they said. The potential asset injection, if it materialises, means a significant step forward towards Beijing Enterprises Group’s ambition to break out from its principal market – Beijing – to the rest of the mainland.
It is also part of Beijing Enterprises Group’s asset reorganisation, which aims at bundling its non-Beijing city gas portfolio with that of China Gas while leaving Beijing Gas – a wholly owned subsidiary of its Hong Kong-listed infrastructure flagship, Beijing Enterprises Holdings (BEH) – to focus on the capital, where it is the sole supplier of city gas, the sources said. Earlier this month, Beijing Enterprises Group transferred its 21.96 per cent stake in China Gas to BEH for HK$7.39 billion. BEH vice-chairman Zhou Si, also chairman of the board and executive director of China Gas, said on Tuesday the two firms were discussing “co-operation” and declined to comment further.
The China Gas management is looking into the valuation of Beijing Enterprises Group’s portfolio, which is fairly sizeable A source with one of the companies This is despite the fact that China Gas had announced a “strategic co-operation framework agreement” with BEH and its parent to jointly develop “gas-related value-added services”, such as projects that turn coal into natural gas, and jointly bid for new city-gas distribution projects.
“The China Gas management is looking into the valuation of Beijing Enterprises Group’s portfolio, which is fairly sizeable,” one source said. “This makes business sense.” Beijing Enterprises Group amassed its stake in China Gas by buying shares in the market since February last year, jumping into a ferocious multilateral battle for the control of the city gas provider. China Gas was the subject of a hostile takeover by a consortium of smaller rival ENN Energy and Sinopec, the mainland’s No 2 oil firm, as well as Britain-based energy company Fortune Oil.
Analysts said the potential asset injection would meaningfully boost China Gas’ portfolio of 208 city gas projects, ranging from Heilongjiang in the north to Guangdong in the south. Brokerages such as China International Capital Corp, Citi, Jefferies and JP Morgan upgraded on Wednesday their forecasts for China Gas’ earnings for the fiscal years to March next year and March 2015 by between 7 per cent and 25 per cent after the company reported unexpectedly strong interim
I think that our investment stays the same but as the project has grown our % has got less. ie SINOPEC have invested more to increase the project size so there % ownership has grown!As I said this is AN explanation rather than clarification. I do not know the answer just giving a possible explanation!
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