Arko Energy

Arko, which last spring reversed into Golden Land Investments, is looking to buy granite and coal projects in mainland China, requiring up to a £125m investment. A 2.7bn-tonne granite quarry project at Chengpao Port in Fujian province needs up to £25m to go into operation, with a possible a 7-year payback for Arko, which has 70%. The company also has 60% of a venture with the Ningxia provincial government and China Bank of Construction to develop a 577m-tonne coal-mine in north-west China. Chief executive Clement Leung says this would take 2.5 to 3 years to build and require an investment of up to £100m. Arko expects to decide on these projects by next spring. It reckons a mixture of equity and bank finance will be the way to proceed. The company, which bought 60% of Chang Zhou Power Development and joined with Hong Kong group Winko to acquire local shipping services businesses, believes China's rapid economic growth and strong demand for coal-fired electricity and the sands derived from granite should give both projects a good chance of success. The firm has a shipping fleet, among other interests, and lost £0.16m in the year to March. In the 3 months to July, however, it made £1.5m before tax, goodwill amortisation and minority interests. Leung says £3.8m is 'guaranteed' for the full year.

Sector: Gas, Water & Multiutilities

Companies: Arko

Market cap: £98m

PE Forecast: n/a

Share price: 5.5p

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