Factbox: China’s Brightoil on expansion trail

(BestGrowthStock) – Hong Kong-listed Brightoil Petroleum (0933.HK: ) is the top bunker fuel supplier in China’s Pearl River Delta, with a market capitalization of almost $400 million and reported revenue of $770 million for the six months ended December 31, 2009.

In the past 18 months, the China-based firm, with total assets worth about $660 million, has expanded its marine fuels business to Hong Kong, Shanghai, Singapore and Rotterdam.

The company has also been buying assets such as tankers, companies and office space and beefing up staffing this year.

In July 2008, its chairman, Raymond Sit Kwong Lam, purchased a 68.3 percent stake in First Sign International Holdings, which was listed on the mainboard of the Hong Kong Stock Exchange, for HK$700 million through two privately owned companies.

The company was renamed Brightoil Petroleum (Holdings) Ltd a month later, and the stock has since risen from around 5 cents to a peak above 50 cents in May 2010. It traded at 38 cents a share on Monday.

Over the past year, Brightoil has expanded its trading volumes in Asia to 250,000-300,000 tons a month, appeared in the Platts pricing window for the first time six months ago and bought two 80,000-tonne aframaxes that were commissioned earlier this year.

It sub-leases 80,000-100,000 tons of shore-based storage in Singapore and supplies some marine fuels into the world’s largest bunker port by volume, since it obtained a license to do so less than a year ago.

It has a fuel oil term supply deal with oil major Shell (RDSa.L: ), in which the cargoes are mainly sent to outlets in China. Its total supply volumes in China are 150,000-200,000 tons a month, mostly in the south.

PROPOSED STAFFING FOR NEW TRADING HOUSE

Brightoil International Petroleum plans to set up trading desks for fuel oil, distillates and crude in Singapore, Europe and the United States, hiring 165 staff.

It will have 85 staff for its global trading operations, from traders to support staff. Its biggest unit is its traditional stronghold of marine fuels, with 31 personnel and 20 based in Singapore.

The trading firm is expected to have a team of 17 cargo trading personnel each in Asia and Europe, while 20 trading staff have been targeted for its U.S. operations, which include trading natural gas.

Brightoil will provide 15 percent of net profits as bonuses to staff, with 10 percent to be disbursed at the end of the financial year and the rest paid over three years, in line with market practice.

The trading firm will be managed by a core team of seven, including a CEO, who sources said will be Quek Chin Thean, former global head of BP’s fuel oil desk, and three vice-presidents, one of whom will oversee its global trading from Singapore.

RECENT ACQUISITIONS

Aug 2010 – Brightoil plans to buy five new Very Large Crude Carriers (VLCCs) for $537.5 million, with four to be delivered by second-half 2012 and the remaining one by first-quarter 2013, and funded by bank financing and internal resources.

The firm has also bought 52,000 square feet (4,830 sq meters) of office space in Singapore to house its new trading company, which is expected to move in by end September.

Brightoil will buy two double-hulled Aframax tankers of 115,000 dwt each, to be delivered by September 10, for $115 million, a filing with the Hong Kong Stock Exchange showed.

It is also expected to lease storage facilities in Singapore to facilitate its expanded trading activities.

July 2010 – It acquired Access Wealth Holdings, which trades naphtha as well as operates oil berths and storage facilities in Jiangsu, for HK$1.485 billion ($191 million).

Feb 2010 – Brightoil agreed to purchase office and car parking spaces in Zhoushan City, China, for an amount not exceeding RMB30 million.

March 2010 – It acquired its second double-hulled oil tanker, a 107,500-dwt aframax, from Liberia-incorporated marine shipping company Rasos Shipping for $52.5 million from bank financing and internal resources. Brightoil took delivery of its first ocean-going tanker, the 2009-built, 107,500 dwt aframax tanker Nisos, in January.

ASSETS

– Shenzhen

Brightoil owns and runs oil storage depots with a total capacity of 400,000 cubic meters (cu m), and a supporting specialized wharf for petrochemicals of 80,000-dwt level, which are located in Kuichong town in Shenzhen, close to Yantian Port. It plans to expand total capacity to 1 million cubic meters.

– Zhoushan

Brightoil is building 5.5 million cu m of storage for oil products in China’s Zhoushan City in northeastern Zhejiang Province, with its investment into the project expected to reach 7.1 billion renminbi.

– Dalian

It is developing an 8 million cu m oil storage facility and 13-15 berths on Changxing Island, Dalian, including a berth that can handle tankers of 300,000 deadweight tons (dwt).

The storage tanks will be equipped to store fuel oil, diesel, jet fuel, chemicals and crude. Brightoil owns 100 percent of the oil storage facilities, and 60 percent in the terminal project joint-ventured with Changxing Island Investment Company.

* RAYMOND SIT, CHAIRMAN, BRIGHTOIL PETROLEUM HOLDINGS

Apart from his role as chairman of Brightoil Petroleum and its various subsidiaries, Sit holds the following positions:

– Member of National Committee of the Chinese People’s Political Consultative Conference

– Standing Member of All-China Youth Federation Director of China Overseas Friendship Association

– Vice President of the China Chamber of Commerce for Petroleum Industry

– Director of the Board of Trustees of Nanjing University

(US$=HK$7.7664, 6.7820 yuan)

(Reporting by Francis Kan; Editing by Ramthan Hussain)

Factbox: China’s Brightoil on expansion trail