Business
Train maker China CNR Shares Fall in Hong Kong Debut
HONG KONG – Shares in bullet-train maker China CNR Corp. fell on their first day of trading in Hong Kong on Thursday, in the latest setback to the city’s initial public offering market after a high-profile IPO was withdrawn last month.
State-owned CNR’s shares fell 1.6% after the company raised US$1.2 billion in the first big IPO in Hong Kong since pork producer WH Group Ltd. last month pulled its planned IPO.
WH Group, which at one point was seeking to raise US$5.3 billion, scrapped its IPO after investors balked at the price. WH Group changed its name from Shuanghui International Holdings Ltd., a Chinese pork producer, after Shuanghui acquired U.S.-based Smithfield Foods Inc. Its IPO was seen as possibly reviving a Hong Kong IPO market that had lost a couple of big-name IPOs this year.
In addition, Chinese e-commerce giant Alibaba Group Holding Ltd. picked the U.S. over Hong Kong for a planned listing this year that is expected to be one of the biggest in history, while Hong Kong tycoon Li Ka-shing opted to sell a stake in his retail arm, A.S. Watson Co., rather than list it in Hong Kong and London.
Shares of CNR closed at HK$5.09, down from an IPO price of HK$5.17. The stock underperformed the benchmark Hang Seng Index, which rose 0.5%.
CNR generates half of its revenue from China Railway Corporation, the state-owned railroad operator. It also exports trains and parts to more than 80 countries, making 7.6 billion yuan, or 7.8% of its revenue, from overseas sales in 2013, according to its prospectus.
Unlike WH Group, which failed to get cornerstone investors, CNR locked in around 8% of the deal from other state companies, including car maker Dongfeng Motor Corp. and machinery maker China National Machinery Industry Corp. That helped get the deal done. Cornerstone investors generally promise to hold company stock for a certain period of time after it is listed, giving other investors confidence in the stock.
But support from China’s state sector couldn’t completely overcome investor doubts about the outlook for China’s rail industry.
“If you look at CNR’s valuation it is not that demanding, but investors still see flat earnings prospects,” said Ben Kwong, head of research at KGI Asia.
While recently announced stimulus measures that include railroad construction will drive growth in the sector as a whole, margins for train manufacturers such as CNR remain thin, Mr. Kwong said.
The Chinese government announced measures in April to drive growth, including a plan for accelerated railway construction, particularly in central and western China.
CNR’s IPO price valued the company at 9.35 times its 2014 forecast earnings, or around 8 times 2015 earnings, according to a person familiar with the situation. Rival CSR Corp., which is listed in Hong Kong and Shanghai, is trading at 11.59 times 2014 earnings and 10.32 times 2015 earnings, according to Capital IQ.
What enthusiasm there is in the market for IPOs seems to lie with Chinese technology stocks such as JD.com Inc., which priced above expectations Wednesday in a US$1.8 billion New York IPO.
The Alibaba competitor relies on an expensive network of its own warehouses and delivery trucks to sell directly to customers and has yet to turn a profit. In contrast, Alibaba is profitable, largely providing a sales platform rather than selling directly to customers.
However, investors are optimistic about a JD.com tie-up with Tencent Holdings Ltd.—another Alibaba rival—and the Chinese e-commerce space, bankers said. The same can’t be said for more traditional sectors like rail, Mr. Kwong said.
In fact, the overall mood in Hong Kong toward IPOs remains muted. “The whole market sentiment on IPO issuance is not very encouraging,” Mr. Kwong said.
– WALLSTREET JOURNAL
Business
Adoption of AI Feature as NIPetGE Pays Courtesy Call at NNPC Ltd
Enhanced adoption of artificial intelligence and other digital technologies to improve operations in Nigeria’s oil and gas industry is taking the centre stage in relevant circles.
The issue came up strongly when the President-elect of the Nigerian Institute of Petroleum and Gas Engineers NIPetGE, Prisca Kanebi, paid a courtesy call at the Nigerian National Petroleum Company Limited (NNPC Ltd), Abuja.
Biztellers reports that the Kanebi led delegation was received by the Group Chief Executive Officer of the NNPC Ltd, Bayo Ojulari, represented by the Executive Vice President, Gas, Power and New Energy, Olalekan Ogunleye.
According to a statement made available on Sunday, discussions at the meeting focused on the future of Nigeria’s hydrocarbon industry amid global energy transition concerns, technological changes and sustainability targets.
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The statement indicated that the NNPC Ltd acknowledged the role of NIPetGE in policy advocacy, technical development and innovation within the sector.
Speaking during the meeting, Kanebi highlighted recommendations from the institute’s recent conference, including the proposed establishment of a national centre for intelligent energy systems to support the deployment of artificial intelligence, the Internet of Things and robotics across the petroleum value chain.
She also commended the Federal Government’s decarbonisation efforts and reiterated the institute’s support for policies aimed at improving sustainability in the industry.
The institute also recommended the creation of a hydrocarbon-linked emissions trading system to allow Nigeria to take part in global carbon markets.
The institute also proposed fiscal incentives to support local manufacturing and service delivery in the oil and gas sector, as well as the expansion of the Energy Transition Plan to include measurable upstream decarbonisation targets backed by tax credits.
Other proposals included increased public-private partnerships in emission control infrastructure, carbon capture projects and hybrid renewable energy initiatives.
Both organisations also stressed the need for stronger collaboration between industry and academic institutions to improve professional capacity and align petroleum engineering practice in Nigeria with international standards.
The institute further disclosed that its bill seeking chartered status had passed second reading and was progressing towards a third hearing at the National Assembly.
It added that NNPC Ltd pledged support for future collaborations with the institute on initiatives aimed at improving efficiency and innovation in the energy sector.
Business
FHC Orders NUPRC to Comply with PIA
Business
Local Firms Lead Revival of Idle Oil Wells – SPE
Nigeria’s indigenous oil and gas companies are reopening dormant wells and ramping up production from assets acquired from international oil companies (IOCs) to boost crude oil output.
The Society of Petroleum Engineers (SPE), Nigeria Council, made the assertion through its Chairman, Francis Nwaochie, on the sideline of the Offshore Technology Conference (OTC) which ended at the weekend in Houston, Texas.
Nwaochie said indigenous operators were already taking advantage of opportunities created by disruptions in the global energy market to increase production from existing assets.
According to him, local firms that recently acquired onshore and shallow water assets from IOCs were aggressively reviving inactive wells and maximizing available infrastructure to raise output levels.
“What we are seeing now is that indigenous companies are reopening wells from the assets they acquired from the IOCs. Some of them have almost doubled production from those existing assets,”.
He explained that the renewed focus on dormant wells and existing facilities had become critical at a time the global oil market was facing supply shortages triggered by geopolitical tensions in the Middle East.
The SPE Nigeria Council Chairman noted that Africa, particularly Nigeria, was well positioned to benefit from the supply gap because of the continent’s relative stability compared to some other oil-producing regions.
“There is a huge opportunity for Africa right now. The focus is gradually shifting to Africa because of the volatile environment in many other producing regions.”
He stated that indigenous operators were leveraging digital technologies, financing opportunities and local expertise to improve production efficiency and optimise existing fields.
He added that stronger implementation of local content policies was also helping to create a more stable operating environment for oil and gas investments.
“Local content is very critical. Once communities and local companies clearly understand their roles and benefits, then you create peace across the industry. Business only thrives in peaceful environments.”
ALSO READ: Nigerian Navy Recovers Large Cache of Illegal Refined Petroleum Products
Nwaochie also stressed the need for Nigeria to move beyond crude oil production and begin developing indigenous technologies for the energy industry.
According to him, SPE Nigeria Council was actively supporting innovation and technology development among young Nigerian engineers and researchers.
He disclosed that the association was engaging the National Universities Commission(NUC) on reforms to engineering curricula in universities to better prepare graduates for the future of the energy industry.
“One of our major focuses in SPE is technology development. We should not only import machines and equipment, we must begin to develop our own technologies locally.”
Nwaochie revealed that SPE was already supporting local innovators working on technologies such as remotely operated underwater vehicles (ROVs), noting that indigenous technology development will strengthen Nigeria’s economy and deepen local participation in the oil and gas sector.
“We may not get everything right immediately but we must start somewhere. That is how countries that dominate the global energy industry built their capacities.”





