What the restructuring of Jilin JVCo could mean for SATS

Its stake will be diluted to 21% from 30%.

The ongoing restructuring of a pig-farming joint venture in China in which SATS is a part of will see the entrance of two strategic investors – Charoen Pokphand Group (CP) and Singbridge.

According to UOB Kay Hian, SATS owned 30% of the stakes in Jilin JVCo via its wholly-owned subsidiary SATS Food Services.

"Post restructuring, SATS’ stake in the JV will be diluted to an effective 21%, while CP will own 65% and Singbridge 14%," the brokerage firm said.

All three parties will contribute additional capital to the joint venture, with SATS injecting another $23.3m in investment, consisting of the $4.5m initial net investment during the restructuring and an additional $18.8m.

Here's more from UOB Kay Hian:

We view the entry of CP and Singbridge positively, given the former’s expertise in food processing and distribution and the latter’s experience in China projects. Singbridge is a Temasek-linked company and invests in and develops integrated cities with a focus on China, as well as projects in the Jilin Food Zone, a premium disease-free food zone with an integrated system to ensure integrity and safety of food supply.

Meanwhile, CP is a major shareholder of CP Foods which has expertise in the livestock business and an extensive distribution network with exports to over 30 countries. CP Food’s vertically integrated businesses include the manufacturing of animal feed, meat processing and manufacturing of ready-meal products, as well as food retailer and restaurant business.