Sharply dropped share price of Kunlun Energy Co., Ltd. (SEHK: 0135) is expected to stop Singaporean sovereign wealth fund Temasek Holdings from investing more in it.
Kunlun Energy, a subsidiary of PetroChina Co., Ltd. (SHSE: 601857 and SEHK: 0857), said in the evening on August 27 that Li Hualin had resigned from it due to an investigation triggered by concerned authorities and before a new chairman was nominated, Zhang Bowen, executive director with it, would serve as the chairman. In addition, it named Wen Qingshan, chief accountant of China National Petroleum Corp. (CNPC), the biggest oil and gas producer in the Chinese mainland, as executive director.
Hurt by this, it fell 13.51 percent to close at HKD 10.88 on the Hong Kong bourse on August 28. In line with industry observers, there will be possibility for the price to continue dropping as it will take investors a period of time to consume related negative information. In addition, the sharply dropped share price is expected to stop Temasek from investing more in it.
Temasek was always brought under the limelight owning to an up to 16 percent annualized return on investment in the past a decade and according to financial results it released for the fiscal year ended March 31 this year, it expanded investment in the fields of energy and resources, with the net standing at SGD 4 billion. It bought into Kunlun Energy, a Hong Kong-listed firm that was mainly engaged in the exploration & development, transportation and comprehensive use of natural gas in the Chinese mainland. This was the sole new investment in launched in the market in the fiscal year and the stake it controlled in the target was not more than one percent.
Available information shows that CNPC controls a 61.95 percent stake in Kunlun Energy, acting as the biggest shareholder of the latter. A spokesperson with PetroChina said in a statement on August 28 that Kunlun Energy would see its clean and green energy-oriented strategy continue. It was busy in studying feasible modes and methods to support the latter, an effort to ensure the stable production and operation.
A top executive with Shenyin Wanguo (H.K.) Ltd. pointed out that the investigation triggered against its top executives would deliver a short-term impact on it. Its valuation was not high and after related negative information was well consumed by investors, there might be possibility for its share price to rebound largely. It had a sharp edge in the field of natural gas and considering this, there would be little possibility for Temasek to quit it within a short period of time.
