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凱富能源集團有限公司

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Hoifu Energy involved in oil and gas trading and

 

petrol station operation in Guangxi Investment of

 

approximately HK$600 million for controlling

 

shareholding of Qinzhou Hengyuan and acquisition

 

of controlling shareholding of Guangxi Chenxi

 

and Beihai Tianxiang

 

Being the forefront of the China-ASEAN strategic alliance relationship, Guangxi shall support and procure the cooperation between China and ASEAN by capitalizing on its location advantage and hub function in multi-regional cooperation, which has brought a golden opportunity for the development of Guangxi Beibu Gulf.

PetroChina has invested in the construction of a refining and petrochemicals base with capacity of 10,000,000 tons per annum and an oil storage base with capacity of 20,000,000 tons in Guangxi, as well as the refinery chemical integration project and its ancillary project with capacity of ten million tonnage in Beihai, putting Guangxi in an enviable position to become an international petrochemicals base.

[Qinzhou Port Petrochemical Industrial Park] (欽州港石化產業園) has been upgraded into “China Chemical Industry (Qinzhou) Park”. Construction of 67 berths was completed in Qinzhou Port, of which 23 are with capacity of more than ten thousands tonnage. The construction of national grade oil ports and waterway with capacity of 300,000 tons has also been completed and put into operation.

Covering administrative regions under the jurisdiction of four cities of Nanning, Beihai, Qinzhou and Fangchenggang, Guangxi Beibu Gulf Economic Zone is the first international and regional economic cooperation zone in the PRC. Corporate imports and exports business is benefit from further tariff incentives in ASEAN countries.

In light of the second mover advantages in geographic features, strategic position and economic development of Guangxi, Hui Chi Ming, the Chairman of Hoifu Energy Group, conducted several team site visits to Guangxi for the exploration of investment and cooperation opportunities. In August 2013, Dr. Hui Chi Ming, the Chairman, Dr. Yukio Hatoyama, the Honorary Chairman and Mr. Neil Bush, the Vice Chairman of Hoifu Energy Group, headed a professional team to Qinzhou for inspection of petrochemicals projects of PetroChina and Guangxi Yuchai as well as cooperation and communication with the government and enterprise officials, which procured Hoifu Energy to involve in the investment and operation of relevant projects in Guangxi.

 

Hoifu Energy subscribed for 51% equity interest in

 

Qinzhou Hengyuan by way of capital injection

On 30 August 2013, Hoifu Energy Group Limited (HK00007, the “Hoifu Energy”) and its wholly-owned subsidiary, Guangxi Hoifu Energy Limited* (廣西凱富能源有限公司) (the ‘‘Guangxi Hoifu Energy’’) entered into a capital injection agreement with Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd.* (廣西欽州恒源石化有限公司) (the ‘‘Qinzhou Hengyuan’’) and its sole shareholder, Mr. Ding Wei Er.

Hoifu Energy and its wholly-owned subsidiary, Guangxi Hoifu Energy, subscribed for 51% equity interest of Qinzhou Hengyuan by way of capital injection of RMB187,300,000 (equivalent to approximately HK$237,871,000) into Qinzhou Hengyuan.

Qinzhou Hengyuan is a company incorporated in Qinzhou, Guangxi with limited liability upon approval by the relevant authority of the PRC Government in 1995 and commenced operation in the same year. It has obtained relevant necessary licences for carrying out its operation of refined oil and petrochemical products business.

Qinzhou Hengyuan Group owns an integrated land for oil and gas storage with total area of 163 mu in Qinzhou Port. The first oil depot with storage capacity of 24,000 cubic meters will become operational after its construction work is completed by March 2014. It is expected that construction of the second oil depot with storage capacity of 160,000 cubic meters will be completed and put into operation in June 2015.

Qinzhou Hengyuan Group also owns the exclusive usage rights of the Qinzhou Port Railway Line located in an integrated land for provision of railway transportation services for oil and gas and chemical products.

Qinzhou Hengyuan Group owns two aquatic refueling vessels with total capacity of 450 tons and current annual sale volume of aquatic refined oil of approximately 12,000 tons. It also owns two refined oil transportation vessels with capacity of 1,000 tons, with oil shipping volume of about 48,000 tons for 2012. Another refined oil transportation vessel with capacity of 3,000 tons is under construction and is expected to commence operation in October 2013.

Besides, Qinzhou Hengyuan Group has two subsidiaries, namely Qinzhou Yuming Niannianfeng Warehouse Co., Ltd.* (欽州市玉明年年豐倉儲有限公司) and Guangxi Wuwu Luoyu Oil Station* (廣西武嗚縣鑼圩加油站), which were owned as to 99% and 90% by Qinzhou Hengyuan respectively.

According to the valuation report prepared by an independent valuation institute in China, as at 30 June 2013, the then net assets value of Qinzhou Hengyuan Group was approximately RMB180,100,000. In 2012, Qinzhou Hengyuan Group recorded a sale volume of oil of approximately 100,000 tons with turnover and net profit after tax of RMB811 million and RMB6.90 million respectively.

Mr. Ding Wei Er undertook and guaranteed that the audited annual turnover and the audited annual net profit after tax of Qinzhou Hengyuan shall not be less than RMB4 billion and RMB40,000,000 respectively within five years commencing from the completion of the capital injection by Hoifu Energy Group into Qinzhou Hengyuan. In the event of any shortfall in the net profit, Mr. Ding Wei Er will pay up in full for any shortfall in the net profit on a dollar-for-dollar basis to Qinzhou Hengyuan. Industry professionals expected, the rental turnover from oil depot of Qinzhou Hengyuan will bring stable income upon the completion of construction of the self-owned oil depot; and the operational capacity of Qinzhou Hengyuan Group will be improved substantially by the enhancement of wholesale and retail scale of refined oil upon the completion of construction of the refined oil transportation vessel.

 

Hoifu Energy acquired 51% equity interest in Guangxi

 

Chenxi and Beihai Tianxiang

In 3 September 2013, Hoifu Energy and its wholly-owned subsidiary, Guangxi Hoifu Petroleum Limited* (廣西凱富石油有限公司) (the ‘‘Guangxi Hoifu Petroleum’’)  entered into an equity purchase agreement with Guangxi Chenxi Gas Co., Ltd.* (廣西晨曦燃氣有限公司) (the ‘‘Guangxi Chenxi’’), Beihai Tianxiang Aviation Oil Storage and Transportation Co., Ltd.* (北海天翔航空油料儲運有限責任公司) (the ‘‘Beihai Tianxiang’’) and Mr. 陳錦海.

Hoifu Energy and its wholly-owned subsidiary, Guangxi Hoifu Petroleum acquired 51% equity interest in each of Guangxi Chenxi and Beihai Tianxiang by cash payment and issuance of convertible notes of Hoifu Energy (HK00007), a total consideration of RMB280,501,103 (equivalent to approximately HK$356,236,401) will be satisfied as to RMB93,500,368 by payment of cash and RMB187,000,735 by issue of the one-year convertible notes with a conversion price of HK$1.3 per share.

Guangxi Chenxi is a company incorporated in Beihai, Guangxi with limited liability upon approval by the relevant authority of the PRC Government in 1994. The principal activities of Guangxi Chenxi include: development, construction and operation of liquefied petroleum gas terminals and integrated service facilities; storage and sale of liquefied petroleum gas; and sale of fuel oil, lubricating oil, solvent oil and other petrochemical products.

Guangxi Chenxi owns an integrated land for oil and gas dock and oil and gas storage with total area of 130 mu in Beihai, Guangxi, an office building with total area of 4,000 square meters and an oil and gas dock with capacity of 10,000 tons. Guangxi Chenxi also owns a gas storage station with total capacity of 5,500 cubic meters and facilities for storage and bottling of liquefied petroleum gas and loading and unloading liquefied petroleum gas to and from vessels and tankers. Guangxi Chenxi has obtained the approval from the relevant authority of the PRC Government for establishing a functional facility for storage of petrochemical products with capacity of 80,000 cubic meters at its owned land in Tieshangang. Such project is currently under design stage.

Guangxi Chenxi has obtained ‘‘Cylinder Bottling Permit’’ (氣瓶充裝許可證), ‘‘Port Operation Licence’’ (港口經營許可證), ‘‘Gas Business Licence’’ (燃氣經營許可證) and ‘‘Mobile Bottling Permit’’ (移動充裝許可證) to carry out above activities.

Beihai Tianxiang is a company incorporated in Beihai, Guangxi with limited liability upon approval by the relevant authority of the PRC Government in 1995 and was owned as to 75% by Zhuhai Yuchai Yuwei Trading Co., Ltd.* (珠海玉柴宇威商貿有限公司). Zhuhai Yuchai Yuwei Trading Co., Ltd. is indirectly owned as to 30% by Yuchai Group (廣西玉柴機器集團), which is a large state-owned enterprise based in Guangxi.

The principal activities of Beihai Tianxiang Group are wholesale and retail of refined oil and operation of oil stations. Beihai Tianxiang Group has obtained “Refined Oil Wholesale Business Licence” (成品油批發經營許可證), “Hazardous Chemicals Business Licence” (危險化學品經營許可證), “Coastal Oil Transportation Permit” (沿海油品運輸許可證), “Hazardous Chemicals Terminal Operation Permit” (危險化學品碼頭作業證) and “Import and Export Registration Certificate” (進出口備案登記證). Beihai Tainxiang has three wholly-owned subsidiaries, namely 天翔煤炭物資有限公司 (Tianxiang Coal Supplies Co., Ltd.*), 天翔種業有限公司(Tianxiang Plantation Co., Ltd.*) and 廣西天翔投資有限公司(Guangxi Tianxiang Investment Co., Ltd.*). Beihai Tianxiang Group owns three oil depots in Guangxi with total storage capacity of 37,600 cubic meters. Beihai Tianxiang Group has also leased one oil depot with storage capacity of 10,800 cubic meters in Fangcheng Port, Guangxi. All the oil depots are equipped with pier and/or dedicated railway line. Beihai Tianxiang Group owns six oil stations in Guangxi, four of which are in operation while the remaining two are under construction and expected to commence business in October 2013. Beihai Tianxiang Group has six refueling vessels with total capacity of 2,520 tons.

According to the valuation report prepared by an independent valuation institute in China, as at 31 August 2013, the then net assets value of Guangxi Chenxi and Beihai Tianxiang Group was approximately RMB565 million. In 2012, the turnover and net profit after tax of Beihai Tianxiang Group were RMB1.67 billion and RMB56 million respectively.

Guangxi is adjacent to other ASEAN countries. Qinzhou Hengyuan, Guangxi Chenxi and Beihai Tianxiang have exclusive rights on wholesale and retail of oil and gas as well as mature sales and marketing networks which can enjoy preferential tax policies that are made available to qualified enterprises located in Beibuwan Economic Zone. With their exclusive operating conditions, increasing trading of international and domestic petroleum gas chemical products between the PRC and ASEAN countries will enable them to play important roles in the operation and generate positive operating revenue.

 

Increase profitability of Hoifu Energy by developing

 

downstream business for oilfields

Since last year, Hoifu Energy Group has acquired a number of oilfields and natural resource assets, which in turn owns 7 oil prospects in Madagascar, Egypt and Tunisia and acquires copper and gold mines in Kenya. Hoifu Energy Group actively pursued business diversification of natural resources projects. In order to optimise its operating deployment, Hoifu Energy Group also actively developed the downstream oil and gas business which was in line with the integrated development of upstream oil and gas business. In particular, related acquisition projects were implemented to immediately enhance the Group's profitability. Hoifu Energy Group acquired Qinzhou Hengyuan Group and Beihai Tianxiang Group by way of investment contribution and holding acquisition which was in line with its development strategy and business development target. Such initiatives not only fully improved the Group’s integrated operating conditions, but also immediately boosted its fixed asset. Also, these ensured the long-term and stable operating income sources of Hoifu Energy Group.

Hoifu Energy Group’s capital injection for the 51% controlling shareholding in Qinzhou Hengyuan was completed on 30 October 2013, and the acquisition of 51% equity in each of Guangxi Chenxi and Beihai Tianxiang was completed on 3 November 2013. Completion of the relevant transactions is conditional upon the satisfaction of the agreed conditions set out in agreements entered into by such parties. Hoifu Energy Group has full confidence in fulfilling the agreed transaction conditions.

 

 

During his visit in Guangxi, Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (Left) was cordially received by Mr. Peng Qinghua, Secretary of the CPC Guangxi Zhuang Autonomous Region Committee (Right)

 

 

Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (second left), donated HK$1,000,000 to promote "Beautiful Guangxi, Clean Countryside" (美麗廣西 清潔鄉村) campaign, which highly commended by CPC Guangxi Zhuang Autonomous Region Committee and Guangxi Zhuang Autonomous Region Government. Mr. Peng Qinghua, Secretary of the CPC Guangxi Zhuang Autonomous Region Committee (second right) and Mr. Lan Tianli, Vice Chairman of Guangxi Zhuang Autonomous Region (first right) attended the ceremony and accepted the donations. Dr. Charles Yeung, chairman of the Chinese General Chamber of Commerce ( first left )actively promoted and supported Hoifu Energy Group

 

Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (central), Dr. Yukio Hatoyama, Honorary Chairman (left) and Mr. Neil Bush, Deputy Chairman (right).

 

 

Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (fourth left), Dr. Yukio Hatoyama, Honorary Chairman (third left) and Mr. Neil Bush, Deputy Chairman (third right) headed a delegation to visit Qinzhou, Guangxi.

 

Delegation of Hoifu Energy Group visited Qinzhou and got a warm reception from Mr. Li Xinyuan, Qinzhou Major (front row, fourth right).

 

 

Delegation of Hoifu Energy Group visited Qinzhou Yuchai Petrochemical and got a warm reception from Ms. Yan Ping, Chairman of Yuchai Group (fourth left) and Ms. Chen Qiuping, Chairman of Qinzhou Yuchai Petrochemical (third right). .

 

Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (third right), Dr. Yukio Hatoyama, Honorary Chairman (third left) and Mr. Neil Bush, Deputy Chairman (first right) visited production site of Qinzhou Yuchai Petrochemical, accompanied by Ms. Yan Ping, Chairman of Yuchai Group (second right) and Ms. Chen Qiuping, Chairman of Qinzhou Yuchai Petrochemical (first left).

 

 

During the period in Qinzhou, Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (second right), Dr. Yukio Hatoyama, Honorary Chairman (second left) and Mr. Neil Bush, Deputy Chairman (first right) visited million-ton oil refining site of PetroChina in Qinzhou.

 

Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (left) held a cooperative conversation with Ms. Xiao Yingzi, CPC Secretary of Qinzhou (right), in Hong Kong.

 

 

Dr. Hui Chi Ming, Chairman of Hoifu Energy Group (fourth left) gave a warm reception to Qinzhou government delegation of the Hong Kong Investment, which led by Ms. Xiao Yingzi, CPC Secretary of Qinzhou (fifth right), in Hong Kong.

 

 

 

 

 

 

 

 

 

 

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