Main points of investment
Event: the company placed 55.4 million shares and 24.6 million new shares to CEF Concept and Go Million respectively, accounting for 20% of the total share capital before the placing. The allotment price is HK $2.1 per share, which is 18.16% off the benchmark share price. The net capital raised after the completion of the placing is HK $167 million, which is proposed to be used as general working capital for the development of kitchen solid waste treatment business and possible acquisition of water treatment business.
After the new team takes over, the first round of financing will accelerate the development of environmental protection business. The company's management team changed in May 2016, ushering in a new major shareholder and senior management team dominated by the original A-share 600187.SH. The new team has rich experience and industry resources in the field of municipal environmental protection and water affairs in China. in the future, Venture Group Holdings will become the platform for its second venture. The net amount of HK $167 million raised in this rights issue will boost the progress of the company's Taiyuan catering and other projects, and help the company's potential water treatment business acquisition, forming a preliminary layout of environmental protection assets.
The subscriber has strong capital and industry background, which provides a solid backing for the company to expand its environmental protection business. The subscriber CEF Concept is a subsidiary of China Environmental Fund (China EnvironmentFund) of Qingyun Venture Capital, and Go Million is wholly owned by Zhu Junhao, Executive Director of Jin Li Feng. Qingyun Venture Capital is a well-known PE in the field of clean environmental protection in China, which has successfully invested in projects such as Dongjiang Environmental Protection. Jin Li & Fung is one of the most powerful comprehensive financial institutions in Hong Kong. After they become shareholders of the company, they will continue to give more support not only in terms of capital, but also in the company's business development and refinancing, providing a solid backing for the company's environmental protection business development.
Investment suggestion: the company develops environmental protection business and opens up new growth space. At present, the development of environmental protection business has just started, and the contribution of short-term performance is not significant. It is suggested that investors can keep their attention.
Risk hint: the progress of environmental protection business development is not as expected.