MCC once fell by 20%, divesting non-core assets to cash out over 60 billion RMB

China Metallurgical Group Corporation (01618.HK) opened down 5.9% today (9th) and the decline rapidly expanded in the early session, dropping as much as 21.4% to a low of HKD 1.87, hitting a four-month low. It is currently reported at HKD 1.96, down 17.65%, with trading volume surging to 113 million shares, involving HKD 222 million.

The group announced after the market closed yesterday that it plans to divest non-core assets and optimize resource allocation, intending to sell all equity and debt interests in China Metallurgical Real Estate to Minmetals Land Holdings; to sell all equity interests in the Nonferrous Metals Institute, China Metallurgical Copper Zinc, and Ruimu Management, as well as 67.02% equity in China Metallurgical Jinji to China Minmetals; and to sell all equity interests in Huaye Duda to China Minmetals, with a total cash consideration of RMB 60.676 billion (the same below).

Upon completion, the company's positioning as a core platform under China Minmetals focused on engineering contracting and the cultivation of emerging specialty industries will be clearer and more prominent. Assuming the sale is completed by June 30 this year, the estimated loss from the sale is about RMB 2.519 billion. The net proceeds are expected to be approximately RMB 60.2 billion, of which 75% will be used to support the group's diversified business system; the remainder will be used to supplement working capital and repay existing debts, among other purposes