According to a Shanghai Metals Market article, the Chinese god ship is really coming! The merger of the North and the South ship was confirmed, and its 8 companies announced the same evening, the market value of the 8 companies soared by more than 20 billion in the past month.
Collective Reorganization Merger
From the South and the North to Shenhua and Guodian. Every merger of giants brings infinite space for imagination, and this time, the opportunity for the North and the South has finally come!
Historic moment! 8 listed companies collective announcement, take the north and south ship to start strategic reorganization!
- The merger of the North and the South is finally going to be a reality! On the evening of July 1, eight listed companies, including China heavy Industry (601989), China Coastal Defense (600764), Jiu Zhiyang (300516), China Power (600482), China Emergency (300527), China ship Defense (600685), China Shipbuilding Technology (600072), and China Shipping (600150), all issued announcements.
- The company received the notice of the actual controller on July 1, and the company is planning a strategic reorganization with China Shipbuilding Industry Group Co., Ltd., and the relevant plan has not yet been determined.
- The plan also needs to be approved by the relevant competent authorities.
Shipbuilding Heavy Industry Promoting Integration
In May this year, China Shipbuilding heavy Industry held a meeting to promote the integration and reorganization work, saying that it would promote the integration and reorganization work as a whole from the perspective of short-term and long-term development. Since the second quarter of this year, the pace of capital operation of the North-South ship system has accelerated significantly.
Companies Benefited?
Almost all of the eight listed companies have risen since June, with only a small drop in China’s emergency response. As of July 1, the total market value of the eight listed companies was 250.166 billion yuan, while a month ago, the total market value of the eight listed companies was 229.022 billion yuan, that is, one month, the market value of the eight companies soared 21.145 billion yuan.
Merger Impact
As an important development of the mixed reform of state-owned enterprises, the merger of the North and the South will certainly affect the capital market. What is the trend of the concept shares of the North and the South today? What far-reaching impact will the merger of the North and the South have on the development of China’s shipping industry?
The merger of North and South ships will come true
The discussion about the merger of the North and the South ships has appeared continuously since the merger of the North and the South into China. In September 2016, Xiao Yaqing, director of SASAC, said of whether the North and South ships would merge. “anything can happen,” Xiao Yaqing, director of the State-owned assets Supervision and Administration Commission, said in September 2016.
Optimizing the Merger Lay Out
During the two sessions this year, when talking about optimizing the layout of state-owned capital, Xiao Yaqing mentioned that it is necessary to actively and steadily promote the strategic reorganization of the fields of equipment manufacturing and shipbuilding, and continue to promote the professional integration of marine engineering equipment and other fields, and constantly improve the efficiency of resource allocation. This is interpreted as: silent for a period of time the North and the South ship merger speculation may come true!
Central Inspection Requirements
According to media reports, on May 13, China Shipbuilding heavy Industry held a meeting at the group headquarters to promote the integration and reorganization work, and Wu Yongjie, deputy secretary of the China Shipping heavy Industry Group and general manager, attended the meeting and made a speech.
Wu Yongjie pointed out: this meeting is a concrete measure for implementing the requirements of the central inspection work and for the group company to strengthen the construction, promote promotion, and establish knowledge and reform to promote development and deployment, and is an important measure for the group to pay attention to the implementation of reform and accelerate the integration and reorganization work to achieve more actual results. It is necessary to give full play to the leading core and political core role of the CPC Committee, highlight the core concept of putting the army first, unify thinking, build consensus, and promote the integration and reorganization work as a whole from the perspective of short-term and long-term development.
Announcement According To Relevant Rules
Peng Huagang, secretary general of the State-owned assets Supervision and Administration Commission of the State Council, also said on April 16 that since the merger of North and South ships involves listed companies, “when it can be announced in accordance with the relevant rules, enterprises will certainly announce them in accordance with the relevant rules and requirements.”
Since the second quarter, the pace of capital operation has accelerated significantly.
Companies Reorganizing Their Assets
Since the second quarter of 2019, the pace of capital operation of the North-South ship system has accelerated significantly. On the one hand, the Southern ship reorganized the assets of its two listed companies through asset replacement and reorganization, pooling the marine power business to China Shipbuilding Defense, and at the same time pooling the shipbuilding assets to Chinese ships; on the other hand, in the North ship system, China heavy Industry injected Qingdao orbit into listed companies to absorb new high-quality assets, and at the same time cleared its non-performing assets through bankruptcy liquidation.
Promoting Capital Operations
In fact, as early as 2016, China heavy Industry has been promoting capital operations. For example, in February of that year, China heavy Industry transferred Shanchai heavy Industry and Chongqing Gearbox to China Shipbuilding heavy Industry; in October 2017, China heavy Industry plans to raise about 22 billion to buy 42.99 per cent stake in large Shipbuilding heavy Industry and 36.15 per cent stake in Armed Shipping heavy Industry. In December last year, China heavy Industry sold its shares such as Qingdao Washang to China Shipbuilding heavy Industry to unload its marine industry assets.
Reason for Restructuring Shipping
A researcher at the SASAC Research Center previously told the media that the reason for promoting the strategic restructuring of shipping, chemical and other fields, as well as the specialization and integration of marine equipment and electric power, is mainly due to the serious repeated construction of these industries, low industrial concentration, weak ability of independent innovation, weak market competitiveness, and so on. Promoting the integration of regional resources is conducive to reducing homogeneous competition. Only from the perspective of marine equipment, to promote its integration is mainly aimed at a number of central enterprises marine equipment industry facing operational difficulties, to help them out of difficulties.
The “two ships” seek to fit together again
It is not too much to say that “two ships” are brother units. China Shipbuilding Group and China Shipbuilding heavy Industry were both established on July 1, 1999. China Shipbuilding Industry Corporation, which was transformed from the former sixth Ministry of Machinery Industry, is one of the two major state-owned enterprises in China’s shipbuilding industry.
China’s ShipBuilding Corporation
As early as September 1963, the State Council decided to set up the sixth Ministry of Machinery Industry from the three machinery parts. In May 1982, with the approval of the State Council, the China Shipbuilding Industry Corporation was established on the basis of 135 enterprises and institutions of the Ministry of six Machinery and 15 enterprises and institutions of the Ministry of Communications.
In the context of the reform of state-owned enterprises, in July 1999, China Shipbuilding Industry Corporation split into two, the establishment of China Shipbuilding Industry Corporation (commonly known as Southern Shipbuilding) and China Shipbuilding heavy Industry Group Corporation (commonly known as North Shipbuilding). At that time, with the spring tide of a new round of state-owned enterprise reform and the integration of state-owned enterprises, the North and South ship once again ushered in the “fit” news.
After the separation, in the 20 years of development, the two companies have become the “Big Mac” of the industry, with assets of more than 100 billion, and become the leaders of the industry.
- China Shipbuilding Group: founded on July 1, 1999, it is a very large state-owned enterprise directly under the central government on the basis of the enterprises and institutions of the former China Shipbuilding Industry Corporation.
- It is an authorized investment institution authorized by the state and directly managed by the central authorities. It ranks 364th among the top 500 in the world
Role of Shipbuilding Group
China Shipbuilding Group is the main force of China’s shipbuilding industry, it has gathered a number of China’s most powerful backbone ship construction and repair enterprises, ship research and design institutes, ship supporting enterprises and ship foreign trade companies, a total of about 60 wholly owned and shareholding enterprises and institutions, products covering bulk carriers, oil tankers, container ships and other major ship types and liquefied natural gas ships (LNG ships), marine engineering equipment and other high-tech, high value-added production.
By the end of 2017, China Shipbuilding Group has more than 40 second-class units, located in Beijing, Shanghai, Guangdong, Jiangsu, Jiangxi, Anhui, Guangxi and Hong Kong. There are three listed companies, China Shipbuilding Industry Co., Ltd., China Shipbuilding Ocean and Defense equipment Co., Ltd., and China Shipbuilding Technology Co., Ltd. China Shipbuilding Group has overseas operations in Hong Kong, China, the United States, Russia, Thailand and other eight countries and regions.
Shipbuilding Industry Present Scenario
As of 2018, China Shipbuilding heavy Industry has been selected for seven consecutive years of the world’s top 500 enterprises, ranking 245th, ranking first in the world shipping enterprises. It has 5 listed platform companies, 18 overseas institutions and 95 secondary member units, including 66 secondary enterprises, 29 scientific research institutes, total assets of 500.2 billion yuan and 170000 employees.
China Shipbuilding heavy Industry has a strong ability to develop and manufacture large-scale complete sets of equipment and high-tech industries, and has independently developed and produced hundreds of non-ship products. The “Jiaolong” deep-sea manned submersible successfully dived 7062 meters, refreshing the diving depth record of similar manned submersibles in the world. It has undertaken a number of national key projects such as the three Gorges ship lift and the Hong Kong-Zhuhai-Macao Bridge, and won praise in the same industry.
Merger Complementing Companies
According to researchers, the merger of the two ships can enable the two sides to complement each other in research and development, manufacturing and supporting resources, and at the same time resolve the problem of overcapacity in the shipbuilding industry and avoid internal friction.
Compared with the two ships, China Shipbuilding Group is more mature in system construction and market capacity, while China Shipbuilding heavy Industry has stronger R & D and supporting capabilities, so the merger is beneficial to the future development of both sides. At the same time, the merger of the two ships will help to exert scale effect and improve China’s global competitiveness.
Based on the current strategic direction of promoting equipment going out and creating new competitive advantages facing the world, the merger of central enterprises can avoid vicious bidding among domestic enterprises, increase overseas competitive advantages, and increase the overseas share of products.
How useful is the merger?
Pacific Securities pointed out that the merger of North and South ships is good for the development of domestic civilian ships and military ships. On the one hand, civil ships are the international market, at present, the global demand for civil ships is insufficient, China’s competitiveness in high-end ships is still at a disadvantage, the competition between southern and northern ships is not conducive to the overall interests, but also not conducive to the improvement of international competitiveness.
Pacific Securities believes that the restructuring of North and South ships will reduce unnecessary domestic competition and repeated construction in the field of civilian ships, and promote the removal of low-end production capacity and technological progress. In the aspect of military ships, due to the close cooperation between the north and south ships in the development of military ships, the merger will be more conducive to the improvement of China’s naval equipment strength.
South-North Complement Each Other
According to the Guojin Securities Research newspaper, the assets and business of the South and the North ship overlap and each has its own emphasis, the South ship focuses on ship manufacturing, and the North ship focuses on ship design and matching. If the reorganization is successful, the military ship business will be better coordinated, and the civilian ship business is expected to form a joint force to break through the high-tech ship type and jointly expand the overseas market.
North and South ship concept Unit may benefit
Under the news of the North-South ship merger, the relevant concept units are naturally more worthy of attention. The data show that a total of the following eight stocks have been identified as “North and South ship merger” concept shares.
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Source: Shanghai Metals Market
