Share Name Share Symbol Market Type Share ISIN Share Description
Fortune Oil LSE:FTO London Ordinary Share GB0001022960 ORD 1P
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 10.50 0.00 01:00:00
Bid Price Offer Price High Price Low Price Open Price
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 233.14 164.63 8.00 1.3 272
Last Trade Time Trade Type Trade Size Trade Price Currency
- O 0 10.50 GBX

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alanadale: Despite the vicissitudes of the oil market - Fortune was not an oil play - its holding in CGH is still worth nearly 17p a share at yesterday's CGH shares price of HK$11.32. This is before considering Fortune's other assets like BlueSky etc which would be worth another 5p a share at least. I advise you to watch this space.
exel: as we are now just over a year on from our march 2015 exit from Fortune Oil, and as CGH has not (yet) been taken over, it would seem that this is the end of the road, here. with what has happened to the oil price since those far off days of our 'fascination with Fortune', am guessing that this outcome was something of a 'least bad' blessing in disguise, much as it didn't feel like that at the time. ex
neptune_tad: Copied from Pete44 on Interactive Investor Forum SIMON THOMPSON INVESTORS CHRONICLE THIS WEEK Quote:- The main attraction when I advised buying FTO shares was FTO's investment in China Gas. FTO owns197m shares outright & has beneficial interest in744m shares thro' a jt. venture in China Gas Group Ltd. Combined this means that FTO has an interest in 18.8% of China Gas equity. CG currently has a market value of HK$60bn or £5.1bn at current exchange rates based in stock price of HK$11.96. This means that FTO's direct investment in the company is worth £200m and its 50% share of CG Group's stake is worth a further £379m. Combined that equates to £579m or more than double FTO's market value of £259m. The book value of the investment in CG is £402m in FTO accounts or 30% less than its current open market value.. Glaring valuation anomaly, a fact that a consortium owning almost 57% of FTO issued share capital is attempting to capitalise on by launching a cash bid of 10p a share for the company. FTO's shareholders are also being given a contingent value right ( CVR ) worth 5p a share to benefit from a material share in any value realised from FTO's valuable share holding in CG within 12 months after the completion of the takeover. The CVR is payable if at least 35% of FTO's holding in CG is sold for a price in excess of HK$ 11 per share. If there was any certainty that a sell down of the CG stake would happen, then an exit price of 15p a share seems fair right now. However the minimum cash offer of 10p would be a bargain buy for the acquirer and having had a close look at the offer doc. I feel that an outright bid of 15p a share is more than reasonable, given that FTO's NAV is closer to 20p a share if the stake in CG is marked at market value ( SIT TIGHT )
del44: pieball: 14.1 De-listing Prior to the Scheme becoming Effective and subject to any applicable requirements of the Takeover Code, Fortune Oil intends to make an application to the London Stock Exchange for cancellation of the trading in Fortune Oil Shares on the London Stock Exchange, If the scheme fail to pass its targets and gets voted down, the Fortune Dynasty offer lapses......and the FTO share price will probably fall. But I think we stay listed... I stand to be corrected..anyone?
del44: China was promoted as a growth story but making money has been fraught with woe. Fidelity fund manager Anthony Bolton tarnished his reputation launching an investment trust that ran into losses, and China-related shares aimed at Western investors have often disappointed - ending up acquired at low points. Even Warren Buffett is getting his fingers burnt as a Chinese electrical car maker he holds - BYD Co. - has plunged 40% amid a worsening outlook for the Chinese car market. Fortune Oil (FTO) is one such example in the London market I have followed for maybe 15 years; now in its end-game. The company is UK-incorporated but operates from Hong Kong, nowadays an investment holding company with interests in oil products and urban gas supply to China. It has always appeared a good growth prospect yet the stock has traded volatile-sideways. Board members are predominantly Chinese and the two founding brothers own a controlling 51% stake. Despite there being "independent directors" such a structure has likely deterred institutional investors and broker coverage, another reason the shares have languished. The nagging worry is that while this kind of company ticks certain rules of cricket, you never know when it might throw a googly. A well-timed, if oddly-structured, buyout offer Fortune Oil - financial summary Year ended 31 Mar (no forecasts available) 2009 2010 2011 2012 2014 (15 months) Turnover (£m) 192 276 139 123 262 IFRS3 pre-tax proft (£m) 18.1 26.1 12.2 7.7 49.4 Normalised pre-tax profit (£m) 17.4 23 6.7 6.2 -16.8 Normalised earnings/share (p) 0.4 0.5 0.1 0.2 -0/6 Cash flow per share (p) 1.5 1.3 1.4 1.3 -0.2 Capital expenditure per share 1 0.7 1.6 1.1 0.4 Dividend per share (p) 0 0 0.1 0.2 2.4 Net tangible assets per share (p) 3.9 4.9 4.6 7.5 13.2 Source: Company REFS. After the non-index shares more than halved this year from 14p to a five-year low of 6.3p, a cash offer of 10p a share is proposed by Fortune Dynasty Holdings, a British Virgin Islands company owned by two Fortune directors. With 56.91% of the shares in support, only 42% of the remaining minority holders are needed to achieve the required 75% acceptance level. The news release is quite sketchy; a formal offer document is expected from 14 January, it should be possible for a potential investor to find via Google (GOOG). What raises "takeover arbitrage" interest is a potential further 50% upside to the 10p basic offer, assuming Fortune disposes of its stake in Hong Kong-listed China Gas Holdings (Fortune previously divested gas interests to). This compares with Fortune's current share price of about 9.5p. To Western eyes, the near £200 million stake is the rightful property of owners; whereas the board proposes a "contingent valuation right" to a further 5p a share assuming the volume-weighted average price achieved in CGH over a 12-month period is above HK$11. Properly, minority shareholders are entitled to whatever value is realised, hence this seems a googly. The recent chart and statistics show CGH peaking around July at $16 then falling to about $12 where they trade on a price/earnings multiple near 21 times and yield 0.9%. Such a profile may be exposed to a shift in market sentiment, say if China has problems with its soaring debt. But CGH is one of the largest city gas companies in China, well-positioned to capitalise on the trend to urbanisation and natural gas usage. Long-term it should have excellent prospects (partly why it is opportunistic to buy out Fortune Oil after the share price drop?) and at last July's prelims Fortune said: "our shareholders will continue to have good exposure to this rapidly expanding market through a company where commensurate dividend growth is anticipated." On 13 August Fortune acquired a further 13.25 million shares at HK$14.8, taking its CGH stake near 935 million or 18.6%. Note 11 to September's balance sheet cited the fair value of the stake as £201.7 million equivalent, based on the then share price of HK$12.88. Overall net assets were £360.2 million or 13.9p a share with intangibles of just £370,000. Directors changed their tune when poised to bid Then on 1 September the Chinese government hiked gas prices by 20% (effectively ending a subsidy) which has contributed to the fall in CGH's share price. The tone of Fortune's 28 November Interim Management Statement turned worrisome, saying for example that the slowdown in Chinese growth and fall in oil prices "has increased our inventory risk"... "the slowdown in the growth of China's property market will reduce the rate of gas connections and associated fees in city gas concessions"... and "as a result of the possible uneven timing of distribution of dividends received (from investee operations) Fortune Oil will require careful treasury management in order to avoid future cash shortfalls." Fair to an extent, when oil prices are plunging, but in the words of the late Mandy Rice-Davies: "They would say that, wouldn't they?" when poised to make a cash offer. What irks is seeming potential for a transfer of value in the CGH stake, to the buyout directors (if CGH shares recover). And what might happen if a conditional average share price of HK$11 is not achieved? In pricing Fortune Oil shares at about 9.5p currently, the London market ascribes no value to this proposal whereas you'd expect to see Fortune trading say at 11-12p, all-considered. The return of value from CGH is therefore a key issue which may become clearer as the shareholders' meeting approaches - on or before 28 February. Shareholders are in a hard place - but could yet exact additional value to the basic 10p/share offer Their dilemma is no rival bid being likely given the elements of corporate control; and then a de-listing in March. Yet the buyout directors must still achieve a 75% majority and minority shareholders can express their views, especially if January's offer document still begs questions. If they are left aggrieved then the buyout directors run some risk, this gets picked up online as discontent simmers, to affect their reputations longer-term. So minority shareholders are not powerless. At 9.5p, Fortune Oil is therefore a "takeover arbitrage" situation to watch, also as a test of the conduct of Chinese business (listing in London). With a low chance of the deal falling through, a 10p basic offer to conclude next March and potential further return, the risk/reward profile is interesting.
alanadale: It absolutely stinks of sharp practice to take the shares out ‘at a substantial premium to the closing price of 6.32p last night’ at the absolute bottom of the cycle before the prospect of a dividend begins to weigh in, having one could almost say wantonly created the instability that drove down the share price in the first place by passing the dividend. It is precisely BECAUSE of the market’s fear of something like this happening the share price has underperformed so dismally. Why not make ‘an offer at a substantial premium’ when the share price had climbed to 9p which it most certainly would have done at the prospect of a dividend even allowing for the significant headwinds energy markets are facing. CGH’s margins will be impacted but it is still a cash business the Chinese government needs. Daniel Chiu and Ian Taylor are laughing all the way to the bank my faith in their probity grievously misplaced. I am surprised and disappointed that Frank Attwood has put his name to the deal.
alanadale: I have just sent this to Mr Attwood Dear Mr Attwood I should much appreciate a phone call to explain what the board was playing at in the presentation of the interims in failing to offer a comparable figure for profits after tax factoring out the windfall from the CGH deal? The board has resided over a 50% fall in the share price in the past six months; in the meantime the NAV judged by the CGH holding alone has appreciated some 20%. This is a damming indictment of its management of shareholders’ funds. The market has no confidence in the board because it has, through its actions, shown not the slightest concern for minority shareholders. There is now clearly a conflict of interest between the Concert Group’s interest and those of minority shareholders, the only concession to which has been the doubling of the shares offered in the staff bonus scheme based on the share price performance. However, the share price has now been driven down to such a low level as to make that measure meaningless. Or will a share price of 6.5p be the new benchmark to measure staff bonuses? I think we all appreciate that Fortune has been going through a delicate transformation. But the absence of honest guidance, of useful information to judge performance in a fast changing environment and what at times seems like perverse obfuscation feeds the impression of smoke and mirrors that has utterly destroyed confidence. From a personal perspective I see Mr Chiu and co sitting on a very tidy profit while I am nursing close to a loss on my investment over 20 years – having taken exactly the same risk. That does not seem equitable to me, indeed it is beginning to smack of sharp practice. Fortune in contrast to the vast majority of companies listed on the London Stock Exchange seems to feel it unnecessary to give meaningful forward guidance. That has to change. Sincerely
del44: Well I am staying long, until the end of November and the half year results.But after going through the full year results again, I see it more of a gamble now then before. The gamble is in the share price never doing well on releasing of results. Since buying in here 3 years back, each full year results has always been met with a substantial fall in the share price value. Check 3 year charts for yourselves... The half year results usually are met with a non discript reaction in the share price or a gentle falling away in the weeks after the results. I am someone concerned, that since our full year results in July, that the share price has more or less with our a rally, traded all the way down to our present lows, which is a 2 year low. I have no confidence that the Daniel Chieu will address the underlining issues at FTO, mainly its complete lack of information regarding the direction of FTO. But my gamble is that maybe, just maybe Mr Chieu may decide that now is the time to enlighten us as to his 12 month plan (Forecast) for his vehicle...But with a prolonged fall like this it is hard to see any good news sustaining any upside to the share price ...It may even explain why the share price has been kept down at or around this level. Any bid around 7.75p is hit straight away..I have been watching the L2 order book for a while and our recent rises to just below the 8p mark has been on UT and not through actual trading during the day... So my expectations have been lowered from hold to gamble.....
alanadale: Biffa, (17127) Fortune’s fall from grace has nothing to do with the oil price. Anyone remotely interested in Fortune knows full well that that the oil tab is a misnomer. Originally Fortune attracted investment for capital appreciation. We forewent a dividend for many, many years in expectation of the shares rising over time. In the event Fortune has been a great trading share but a lousy investment. The shares have traded more or less within the same range for the last decade. The board has to accept responsibility for this thoroughly unsatisfactory state of affairs and address it: why has there been no underlying appreciation in the share price in that time and why is it trading at less than a quarter of NAV? There are of course endemic issues: the lack of liquidity, the loss of a premium listing and rerating as an investment company. But that does not explain why the shares are trading at a quarter of NAV. At that kind of discount one would normally imagine something fishy going on; investment companies usually trade at close to NAV. In Fortune’s case it doesn’t because Fortune is controlled by the Concert Group which effectively ‘owns’ the capital appreciation. We, the minority shareholders, having no control over when the underlying assets may or may not be realised, only receive value through dividends. At present there is no dividend and the board has given no guidance on what that dividend might be, so the share price is at sea. It is the management’s cavalier attitude to the market and minority shareholders that is the root of the problem, viz Mr Tee Poon’s famous remark that the company was not responsible for the share price; well, in any self respecting ‘open’ Western company that remark alone would have earned him his P45. Market acceptance is built on profit consistency and predictability. This has traditionally been very difficult for Fortune given the market it has been operating in where size is everything. The board was correct to concentrate on building up the company and in the process withholding a dividend and I believe the decision to piggyback on CGH was sound. But then, having made the breakthrough, they’ve blown it and the sooner they own up to a totally unnecessary extension of the period of uncertainty the better. Mr Chiu and co still haven’t got it that they owe a responsibility to minority shareholders to see we get fair value. They could mitigate the damage by declaring a special interim dividend and indicating the final (without repeating last year’s fiasco of predicting a dividend and then passing it.) They should also provide profit forecasts – the business has settled down sufficiently now – as every other company does. We should all be pestering the board with demands for greater transparency as a way to gaining the market’s trust and to measure performance. If the management has any intellectual honesty it should have the humility to accept that the reason for the dire share price is the market’s scepticism that it is acting in the interests of minority shareholders and it should act to allay that scepticism.
ken536: As I said in my post 17013 FTO share price always low in October then we should see a rise towards the end of 2014 Fingers Crossed
Fortune Oil share price data is direct from the London Stock Exchange
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