Sinopec injects its oil machinery business in Kingdream
September 22, 2014 Category Petrochemicals, Weekly
China Petrochemical Corp (Sinopec) has announced its second asset injection deal in a week, injecting its oil machinery business into its Shenzhen-listed drilling equipment and chemicals manufacturing unit, Kingdream, for CNY1.6 billion. “Upon completion of the deal, Kingdream’s product line will expand from drill bits to a wider array of products used in both onshore and offshore oil and gas drilling and transportation,” Kingdream said. “It will improve our product structure and expand our sales, profit and capacity to cope with market risks.” Sinopec Petroleum Engineering Machinery makes machines used in drilling and fracturing underground formations to release oil and gas, as well as steel pipes used to transport them. Kingdream plans to issue 120 million new shares to raise no more than CNY1.8 billion to pay for the acquisition. The deal forms part of China Petrochemical’s state enterprise reform, which will subject more of its assets to investors’ scrutiny and add pressure for it to improve its profitability. China Petrochemical announced earlier that it was injecting CNY24 billion of oilfield services operations into Hong Kong and Shanghai-listed Sinopec Yizheng Chemical Fiber. Yizheng will sell all of its chemical production assets to China Petrochemical’s listed flagship, China Petroleum & Chemical. Kingdream’s first-half net profit tumbled 85% year-on-year to CNY7.9 million as lower domestic exploration expenditure cut demand for its mainstay product, cone drilling bits. The firm forecast net profit would rise to CNY136.3 million this year and CNY170.2 million next year from CNY67.1 million last year.
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