Sinopec Kantons Holdings Announces Liquidation of Key Joint Venture and Disposal of Major Assets

Key Developments with Potential Share Price Impact

Sinopec Kantons Holdings Limited (“the Company”) has made a significant announcement regarding the liquidation of its 50%-owned joint venture, Rizhao Shihua Crude Oil Terminal Co., Ltd. (“Rizhao Shihua”). This joint venture, which is primarily engaged in crude oil jetty operations and related ancillary facilities, has been a substantial contributor to the Group’s financial performance, accounting for approximately 12% of the Group’s profit before income tax in the financial year 2024.

Details of the Liquidation and Asset Disposal

• Liquidation Proceedings: Rizhao Shihua has officially commenced liquidation proceedings. As part of this process, the joint venture’s liquidation group will execute asset transfer agreements for the disposal of certain operating assets and their ancillary facilities (collectively referred to as the “Relevant Assets”).
• Asset Disposal: The Relevant Assets will be sold to independent third-party transferees for a total transaction price of approximately RMB 2.41 billion. The transaction price was determined based on an asset valuation by an independent valuer.
• Regulatory Compliance: All transaction details will be duly filed in line with regulations concerning the supervision and administration of state-owned assets. Importantly, neither the transferees nor their ultimate beneficial owners are connected persons to the Company.

Financial Impact and Implications for Shareholders

• Recovery of Investment: The Group expects to recover cash amounts broadly equivalent to the carrying value of its investment in Rizhao Shihua under the equity method, following completion of the liquidation.
• Foreign Currency Translation Loss: In accordance with accounting standards, the Group will be required to reclassify cumulative foreign currency translation differences (a loss of approximately HK\$132 million, recognized in other comprehensive income) to profit or loss after the liquidation. As a result, the Group expects to recognize an estimated loss of about HK\$127 million (unaudited) in 2026.
• Impact on Profitability: The loss is primarily due to accounting reclassifications rather than operational losses, but this non-cash loss will still affect the Group’s reported profit for 2026.

Regulatory and Procedural Notes

• Rizhao Shihua is not a subsidiary of Sinopec Kantons Holdings as of this announcement.
• The Disposal does not constitute a transaction or connected transaction under the Hong Kong Listing Rules (Chapters 14 and 14A).
• The liquidation process and asset disposal will proceed strictly in accordance with applicable laws and regulations. Following completion, Rizhao Shihua will be deregistered.

Board and Leadership Information

The announcement was made by the Company Secretary, Huang He, on behalf of the Board on 27 February 2026. The Board comprises a mix of executive, non-executive, and independent non-executive directors, including Chairman Mr. Zhong Fuliang.

What Investors Should Note

• The loss related to foreign currency translation will negatively impact reported earnings for 2026, which may affect investor sentiment and potentially the share price.
• The divestment of a material profit-contributing asset (12% of group profit before tax in 2024) could influence the Company’s future profit base and growth outlook.
• Shareholders and potential investors are advised to exercise caution when dealing in the Company’s securities.

Disclaimer: This article is based on the Company’s official announcement. Investors should consider their own circumstances, consult professional advisers, and review further disclosures from the Company before making any investment decision. The information herein does not constitute investment advice or a recommendation to buy or sell securities.

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