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AnAn banks on parent group to develop investment platform

Backing by AnAn Group (Singapore) has helped the firm to form a JV with Chinese SOEs

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On AnAn International's stock movements, Mr Zhao says the group is not too concerned about short-term price fluctuations and abides by SGX's rules. However, it plans to increase investors' awareness and understanding of the company, and is considering, among other things, having results briefings.

Singapore

FRESH from a name change, fuel oil trader AnAn International is planning to bank on its controlling shareholder's influence and resources as it develops an investment platform in addition to building up its current oil trading operations.

Already, the backing by its parent AnAn Group (Singapore) has helped the firm, formerly known as CEFC International, to form a joint venture with other big-name Chinese state-owned firms to engage in receivables factoring - the sale and purchase of invoices - and financial leasing.

AnAn International plays a pivotal role in the future overseas plans of its parent group, its chief executive and executive director Zhao Guang Ming told The Business Times in an interview held in Mandarin.

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"We hope to leverage AnAn Group's partnerships across the world, to provide resources and operations to help the listed company," he said. "It reflects the largest shareholder's desire for the listed company."

Mr Zhao, 41, joined AnAn on Feb 28 this year, replacing former head Lu Da Chuan who left the same day after two years on the job. Mr Zhao was previously general manager of Beijing Founder Fubon Asset Management. Before that, he worked in China Huarong Asset Management.

AnAn International's name change follows a similar change in its parent group, from Singapore Petrochemical & Energy Development Pte Ltd to AnAn Group (Singapore) Pte Ltd.

AnAn Group, which holds 64 per cent of AnAn International, is owned by Ye Jianming - the controlling shareholder and executive chairman of energy and finance conglomerate CEFC China Energy Company Limited - and Zang Jian Jun, executive chairman of AnAn International.

The Singapore-incorporated firm made waves earlier this year when it invested US$500 million in the US$1.5 billion initial public offering (IPO) of Russian hydropower-to-aluminium firm En+ Group that was held in London and Moscow.

It was thanks to AnAn Group that AnAn International has been able to form a joint venture on Oct 12 this year, with large Chinese state-owned firms such as Citic Construction Co, Beijing Construction Engineering Group Co and Beijing Yintai Investment, said Mr Zhao.

The Beijing-based joint venture, called Yinxin Commercial Factoring Co Ltd, will be involved in factoring, and will also provide consultancy services in relation to commercial factoring and other related businesses.

Citic Construction and Beijing Construction each own a 25.5 per cent stake in the joint venture, while Beijing Yintai holds 34 per cent and AnAn International 15 per cent through its wholly owned subsidiary Shanghai Dajiang Shenyuan Equity Investment Fund Management Co Ltd (Dajiang).

"It's not easy to do a joint venture with such large state-owned companies in China," said Mr Zhao. "But these resources were possible because of AnAn Group."

In the short term, there would be some operational synergies between the joint venture and AnAn International, Mr Zhao said. But he declined to reveal details for now as the firm has not yet publicly disclosed these.

Prior to the joint venture, however, AnAn International had in February and March this year sold receivables totalling 109 million yuan (S$22.23 million) from its wholly owned subsidiary Singapore CEFC Petrochemical & Energy Pte Ltd to Dajiang. Dajiang, in turn, sold this to an unnamed third-party equity fund.

The early repayment of the receivables - albeit at a discount - will optimise working capital cash flow, the group said then.

In the long term, AnAn could monetise its 30 million-yuan investment in the joint venture if and when the latter goes for an IPO, said Mr Zhao.

The joint venture is also significant as it boosts the standing of AnAn International in China, and could lead to more collaboration opportunities with the other joint venture partners in areas such as trading, he added.

AnAn's earnings have shot up this year as its trading business grew in profitability. For the nine months ended Sep 30, the firm recorded net profit of US$12.1 million - up several times from its profit of US$1.13 million for the same period last year.

Revenue for the first nine months of 2017 has also more than doubled to US$1.8 billion, from US$801.2 million last year, thanks to a US$1.06 billion contribution from the new European fuel distribution business it acquired in late December last year.

AnAn International had bought a 51 per cent stake in independent fuel distributor Dyneff SAS for US$20.5 million in cash. Dyneff distributes motor fuels, biofuels and other products in France and Spain through over 100 filling stations, a network of commercial agencies and two wholesale agencies.

The acquisition gave the firm - which earlier reached only the Hong Kong, China and South-east Asian markets - a foothold in Europe's mid to downstream oil and gas industry assets, as well as the logistics and storage business.

"The larger scale of business operations will enhance the group's market position and open doors to more business and investment opportunities," it said then.

The firm continues to look for suitable investment targets, especially in mid to downstream oil assets or those that provide synergies to existing businesses, including financial services projects.

AnAn International also plans to step up its investor relations efforts in order to quell extreme movements in its share price. The firm had been questioned twice by the Singapore Exchange between Jul 10 and Aug 6 in 2015 when its counter jumped more than tenfold from 3.4 cents.

Since reaching a peak of 39.5 Singapore cents in August 2015, it has been on a downward movement and last traded at 7.7 cents on Friday.

Mr Zhao said the group is not too concerned about short-term price fluctuations and abides by the exchange's rules. Nevertheless, it plans to increase investors' awareness and understanding of the company, and is considering, among other things, having results briefings.

"We feel this (awareness) is still lacking," he said. "Our results have been good but the stock is not reflecting that."

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