Sinopec Kantons Holdings Limited (934) reported that its 50%-owned joint venture, Rizhao Shihua Crude Oil Terminal Co., Ltd., has commenced liquidation proceedings. Rizhao Shihua’s operations involve crude oil terminals and ancillary facilities, contributing approximately 12% of Sinopec Kantons’ profit before tax in the 2024 financial year.

As part of the liquidation, certain operating assets will be sold to independent third parties for a total transaction price of RMB2.41 billion. According to Sinopec Kantons, the transaction price was determined in reference to an independent asset valuation, and related details will be filed in line with applicable regulations.

Based on preliminary assessments, Sinopec Kantons expects to recover cash broadly equivalent to the carrying value of its investment in the joint venture. However, approximately HK$132 million in cumulative foreign currency translation differences will be reclassified to profit or loss, resulting in an estimated HK$127 million loss in 2026. The final figure will depend on the completion of settlement and relevant accounting treatment.

Since Rizhao Shihua is not a subsidiary of Sinopec Kantons, the disposal does not constitute a transaction or connected transaction under Chapters 14 and 14A of the Listing Rules. Upon completion of the disposal and confirmation of the accounting treatment, the joint venture will proceed with deregistration in accordance with legal requirements.