Yuanxi Zhang
Long/short equity, value, special situations

Sino Gas International Holdings: 5.7% Gross Profit In 1.5 Months

Recommendation: Long Sino Gas International Holdings (OTCQB:SGAS) at $1.23

Target Price: $1.30


We believe Sino Gas International Holdings' go-private deal is likely to close by the end of June. While the deal valuation is 25% below the median valuation of Chinese natural gas distribution companies, we believe the deal is likely to receive the shareholder approval, the major condition to close the merger. The deal is very attractive to both the strategic buyer and the financial buyer in the buyer consortium. The downside scenario could be higher than the unaffected price as there was a competing offer in the sale process. The reward-to-risk ratio of 1:10 is ok. As a result of these factors, we recommend a...

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