CTF Services (00659) has agreed to divest its entire 100% stake in Hunan CTFS Expressway Co., Ltd., operator of the 72.4-km Changsha-Liuyang Expressway in Hunan Province, for approximately RMB 1.61 billion. Shanghai Infrastructure Construction & Development (Group) Co., Ltd. will acquire 60% of the equity, while Shanghai Urban Construction (Guangdong) Construction Development Co., Ltd. will take the remaining 40%.
The consideration mirrors CTF Services’ net cash投入 for the project and will be settled in three tranches: an initial RMB 50.00 million within 10 business days, a completion payment of about RMB 1.45 billion to be placed in escrow once conditions precedent are met, and a RMB 109.00 million retention to cover legacy land-use and regulatory procedures. The target will also repay a RMB 212.00 million shareholder loan to CTF Services within 30 business days of completion. Existing bank borrowings of roughly RMB 2.11 billion remain with the target company.
CTF Services expects to record an after-tax disposal loss of around RMB 80.00 million in the financial year ending 30 June 2026. Upon closing, the expressway unit will be de-consolidated, enhancing balance-sheet flexibility; proceeds will be redeployed into projects that align with group strategy and for general corporate purposes.
Independent valuer Kroll (HK) Limited appraised the target’s equity at approximately RMB 1.43 billion using an adjusted present value methodology under the income approach. Key inputs included an 8.50% unlevered cost of asset, projected toll-income growth peaking at 13.0%, and a 20% discount for lack of marketability. Sensitivity analysis shows a ±0.50 percentage-point change in discount rate shifts equity value by roughly ±RMB 110 million.
The target posted a RMB 225.80 million net loss for FY 2025 and a RMB 42.80 million net profit in FY 2024; unaudited net asset value stood at RMB 1.54 billion as of 31 December 2025.
Completion is contingent on regulatory approvals, lender consent and pre-handover checks, and is slated within 120 days of the 13 May 2026 agreement date. Because the transaction’s size ratio exceeds 5% but is below 25%, it qualifies as a discloseable transaction under Hong Kong Listing Rules, requiring announcement but not shareholder approval.
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