Zhitong Financial App News, China Security Energy (02399) issued an announcement. On July 22, 2024, the buyer Novel Star Ventures Ltd. (an indirect wholly-owned subsidiary of the company) signed a sales agreement with the seller Astute Triumph Holdings Limited. The buyer conditionally agreed to buy and the seller conditionally agreed to sell the shares, which is equivalent to 29% of the total shares of the target company Rosy Estate Global Limited. The cost was 0.1 billion Hong Kong dollars.

As of the date of this announcement, the target company was owned by the buyer and 49% by the seller, respectively. Upon completion, the target company will be 80% owned by the buyer and will therefore remain an indirect non-wholly-owned subsidiary of the company.

The price (i.e. HK$0.1 billion) will be paid by the buyer to induce the company to allocate and issue 0.2 billion worth shares to the seller at a special authorization price of approximately HK$0.5 per share at the issue price after completion. The issue price had a premium of approximately 66.7% over the closing price of HK$0.300 per share on July 22, 2024.

As of the date of this announcement, the target company was 51% and 49% owned by the buyer and seller respectively, and was mainly engaged in investment holding. Its wholly-owned subsidiary, Oriental Star Source Co., Ltd., is a company incorporated in Hong Kong and is mainly engaged in selling industrial products to customers in Saudi Arabia.

The company has been in a state of loss since 2018, and the Group has been working to expand its business from a single business to a more diversified revenue stream business model. With the establishment and introduction of the industrial products division by the target company in 2021, the Group's revenue began to grow strongly in 2022, thanks to the seller's rich sales and marketing experience and strong relationships with Middle Eastern customers. At the same time, the Group is also involved in energy-related businesses, but it is still in the early stages of development. As a result, the Industrial Products segment became the Group's main source of revenue. As of the date of this announcement, the Group currently holds 51% of the target company's shares through the buyer, and its financial results have been incorporated into the Group's financial statements. In view of the continuing growth trend in the industrial products segment and Saudi Arabia's strong economy, directors (excluding independent non-executive directors, who will express their opinions after considering the opinions of independent financial advisors) proposed the acquisition of an additional 29% of the target company's shares with the aim of maximizing value and benefits for the company and shareholders.

Since its registration and establishment, Target Group has been bringing considerable benefits to the Group, consolidating its position as an important component of the Group's overall business operations. Driven by the target group's ideal performance and future development potential of the Saudi Arabian automobile market, the acquisition will further enhance the Group's long-term financial performance, increase shareholder returns, and optimize the use of financial resources. As part of the acquisition, the allocation and issuance of compensatory shares can align the interests of the seller with the interests of the group to promote the future development of the target group. The reason is that the seller will continue to be a minority shareholder of the target company, and its employees will continue to hold management positions in the target group, thereby increasing the value of the shares and supporting the group's development.