With a market value of nearly 270 billion yuan, China Shipbuilding plans to absorb and merge China Heavy Industry
Five years after the merger of the two major groups, China Shipbuilding Group officially opened a new round of major asset integration.
On the evening of September 2, China Shipbuilding (SH600150, share price 34.9 yuan, market value 156.088 billion yuan) and China Heavy Industries (SH601989, share price 4.98 yuan, market value 113554 billion yuan) issued announcements. The two companies are planning to merge CHI through A share swap by issuing A shares to all CHI shareholders, marking a key step towards resolving competition in the shipbuilder's main industry.
Since the opening of the market on September 3, the shares of the two companies have been suspended, and the suspension is expected to last no more than 10 trading days. As of the close of September 2, China Shipbuilding fell more than 9%, the share price of 34.9 yuan, China Heavy Industry fell more than 6%, the share price of 4.98 yuan.
In terms of market value, before the stock suspension, the combined market value of the two companies reached nearly 270 billion yuan.
The "Chinese giant ship" is coming, will this time repeat the market of the "North-South car" merger?
On September 3, CSSC stocks ushered in a strong opening, as of the close of trading, Kunchuan Intelligent (SZ301311, share price 17.69 yuan, market value 4.46 billion yuan), CSSC Technology (SH600072, share price 11.89 yuan, market value 17.913 billion yuan), CSSC Emergency (SZ300527, share price 6.83 yuan, Market value of 6.579 billion yuan), Jiu Yang (SZ300516, stock price 28.13 yuan, market value 5.063 billion) rose more than 7%.
China State Shipbuilding is the core military and civilian products listed company of China State Shipbuilding Group Co., LTD. It integrates the large ship building and repair, mechanical and electrical equipment, Marine engineering and other businesses of China State Shipbuilding Group, and has a complete shipbuilding industry chain. Visual China map
The merger of two billion-dollar companies
The two companies said in the announcement that the purpose of the major asset restructuring is to further focus on the national major strategy and the construction of a strong military main business, accelerate the high-quality development of ship final assembly business, regulate industry competition, and improve the quality of listed companies.
China Shipbuilding told the "Daily Economic News" reporter that the reorganization will integrate the advantages of China shipbuilding, China Heavy Industry research and production resources and supply chain resources, accelerate the internal business integration of China Shipbuilding Group, further strengthen the top-level coordination of the main business, and effectively reduce competition in the industry.
As the core business of China State Shipbuilding Group, ship final assembly is mainly undertaken by listed companies China State Shipbuilding and China Heavy Industry, which belong to the original two groups. In terms of deadweight tons completed, the global market share of Chinese ships is about 11%, and it has four subsidiaries: Jiangnan Shipbuilding, Waigaoqiao Shipbuilding, CSSC Chengxi and Guangship International, focusing on the repair business of military and civilian ships. China Heavy Industry is in a leading position in ship research and development and manufacturing, and owns ship supporting enterprises such as Dalian Chuantui and Wuhan Heavy Industry.
As of the close of September 2, the price-to-book ratio of China Shipbuilding and China Heavy Industry was 3.20 and 1.35 respectively, and the market value was 156.1 billion yuan and 113.6 billion yuan, respectively, and the joint integration of two listed companies with A market value of more than 100 billion yuan constituted the largest merger and acquisition transaction in the A-share capital market in the past decade.
China Shipbuilding said that this reorganization, the military ship business will be better coordinated, civil ship business is expected to form a joint force, a total expansion of overseas markets, to achieve industrial operation and capital operation integrated development, mutual promotion, synergistic effect, to achieve complementary advantages.
It is conducive to enhancing overseas competitiveness
China Heavy Industry said in its semi-annual report in 2024 that the profitability of global shipbuilding enterprises has generally improved under the impetus of multiple positive factors such as strong market demand, sufficient orders and product structure optimization. In the first half of 2024, China Heavy Industry achieved operating income of 22.102 billion yuan, an increase of 31.05%, and net profit of 532 million yuan, an increase of 177.13%. China Shipbuilding achieved operating income of 36.017 billion yuan, an increase of 17.99%, and net profit of 1.412 billion yuan, an increase of 155.31%. Both companies doubled their performance.
From a nationwide perspective, in the first half of 2024, the three major indicators of China's shipbuilding industry led the world, and the share of ship enterprises receiving orders reached a record high. According to data released by the Ministry of Industry and Information Technology, China's shipbuilding completed 25.02 million deadweight tons, an increase of 18.4%; New orders received amounted to 54.22 million DWT, up 43.9% year-on-year; By the end of June 2024, hand-held orders were 171.55 million DWT, an increase of 38.6% year-on-year.
In the first half of 2024, Chinese vessels received a total of 109 orders for civilian vessels, with a year-on-year increase of 38.21% in tonnage, mainly including 35 oil tankers, 31 bulk carriers, 18 liquefied gas carriers, 14 PCTC vessels, and 10 container ships. China Heavy Industry's Marine transportation equipment sector received a total of 42.643 billion yuan of new orders, an increase of 230.6% year-on-year in terms of deadweight tons, and its shipbuilding enterprises such as Dalian Shipbuilding, Wuchang Shipbuilding and Beihai Shipbuilding have formed a number of superior ship types, such as Capesized bulk carriers, very large ore carriers, very large container ships, LR2 oil products carriers, VLCC and large LNG carriers.
In the hand-held orders, the proportion of high-end and green ship types of the two companies continued to increase. At the same time, China Heavy Industry said in its semi-annual report in 2024 that the shipping market rose at a high level under the influence of factors such as the Red Sea crisis, and factors such as periodic replacement of shipping capacity and green changes in the Marine industry continued to drive strong demand in the shipbuilding market, the shipbuilding industry maintained a high boom, and the price of new shipbuilding approached a historical peak. In June 2024, the Clarkson new Ship Price Index closed at 187.2 points, an increase of 3.8% from the beginning of the year and only 2.3% away from the 2008 peak, the second-highest level since 2008.
In the context of the continuous popularity of the shipbuilding market, China Shipbuilding Group promotes the deepening reform of China Shipbuilding and China Heavy Industry through market-oriented means, and this joint force is conducive to enhancing the overseas competitiveness of China Shipbuilding Group and the international influence of China Shipbuilding. China Shipping told reporters that after the completion of this restructuring, the company's asset size, operating income scale, handheld ship orders will lead the world.
China's gross profit margin edged up
In terms of China Shipbuilding's performance, on August 31, China Shipbuilding released its 2024 semi-annual report. In the first half of this year, the company achieved operating income of 36.017 billion yuan, an increase of 17.99%, and the net profit attributable to shareholders of listed companies was 1.412 billion yuan, an increase of 155.31%.
In the first half of 2024, due to the increase in the number of civilian ships delivered and the average price of a single ship, China's non-net profit turned from a loss to a profit of 1.198 billion yuan.
With the rapid increase in the production volume of hand-held orders, the net cash flow generated by China's ship operating activities turned from positive to negative, from 4.822 billion yuan in the same period of last year to -3.814 billion yuan, which made many investors question the company's cash flow. The company explained in the semi-annual report that due to the increase in investment in products under construction, the cash paid for the purchase of goods and the acceptance of labor services increased by 8.912 billion yuan year-on-year.
China ship secretary Tao Jian told the "Daily Economic News" reporter, operating cash flow from positive to negative indicates that the company's orders, in fact, the company's monetary funds are sufficient.
In addition, in the first half of 2024, the net cash flow generated by China's ship financing activities also turned negative from positive, mainly due to a decrease in the net new borrowings of the company compared with the same period last year. According to the balance sheet data, as of the end of the first half of the year, the company's borrowings were 16.883 billion yuan, a decrease of 32.95%, and monetary funds were 57.203 billion yuan, a decrease of 15.83%. The company said that the decrease in monetary funds and borrowings was due to the company's sufficient funds in hand, the change of financing structure, and the return of loans caused by more.
The reporter noted that although China's shipbuilding hand orders are sufficient, ship repair and Marine engineering business revenue of 34.446 billion yuan, an increase of 22.39%, but the gross margin of 7.64%, only an increase of 0.77 percentage points.
Why has the year-on-year increase in the average price of a single vessel not improved the company's overall profitability? China Shipping said that since 2024, under the support of the limited supply of available shipping places and other factors, the price of new ships has continued to rise, although the steel price of the ship delivered in the first half of the year has declined to a certain extent, but the labor cost has risen rigid, and the price of ship supporting equipment has also risen with the ship price.
In addition, if the final payment income of Waigaoqiao Shipbuilding to recover the offshore engineering platform in the first half of 2023 is excluded, the company's ship repair and offshore engineering business income can increase by 28.70% year-on-year, and the actual gross margin increases by 2.41 percentage points year-on-year.
Regarding the change in gross margin, Tao Jian told reporters that because some of the ships delivered this year are undertaken in 2021 and 2022, there are projects that are loss-making, if these loss-making projects are excluded, the gross margin of ship repair business can increase by 2 to 3 percentage points year-on-year. In the future, the trend of gross profit margin is bound to rise.
On the evening of September 2, China Shipbuilding (SH600150, share price 34.9 yuan, market value 156.088 billion yuan) and China Heavy Industries (SH601989, share price 4.98 yuan, market value 113554 billion yuan) issued announcements. The two companies are planning to merge CHI through A share swap by issuing A shares to all CHI shareholders, marking a key step towards resolving competition in the shipbuilder's main industry.
Since the opening of the market on September 3, the shares of the two companies have been suspended, and the suspension is expected to last no more than 10 trading days. As of the close of September 2, China Shipbuilding fell more than 9%, the share price of 34.9 yuan, China Heavy Industry fell more than 6%, the share price of 4.98 yuan.
In terms of market value, before the stock suspension, the combined market value of the two companies reached nearly 270 billion yuan.
The "Chinese giant ship" is coming, will this time repeat the market of the "North-South car" merger?
On September 3, CSSC stocks ushered in a strong opening, as of the close of trading, Kunchuan Intelligent (SZ301311, share price 17.69 yuan, market value 4.46 billion yuan), CSSC Technology (SH600072, share price 11.89 yuan, market value 17.913 billion yuan), CSSC Emergency (SZ300527, share price 6.83 yuan, Market value of 6.579 billion yuan), Jiu Yang (SZ300516, stock price 28.13 yuan, market value 5.063 billion) rose more than 7%.
China State Shipbuilding is the core military and civilian products listed company of China State Shipbuilding Group Co., LTD. It integrates the large ship building and repair, mechanical and electrical equipment, Marine engineering and other businesses of China State Shipbuilding Group, and has a complete shipbuilding industry chain. Visual China map
The merger of two billion-dollar companies
The two companies said in the announcement that the purpose of the major asset restructuring is to further focus on the national major strategy and the construction of a strong military main business, accelerate the high-quality development of ship final assembly business, regulate industry competition, and improve the quality of listed companies.
China Shipbuilding told the "Daily Economic News" reporter that the reorganization will integrate the advantages of China shipbuilding, China Heavy Industry research and production resources and supply chain resources, accelerate the internal business integration of China Shipbuilding Group, further strengthen the top-level coordination of the main business, and effectively reduce competition in the industry.
As the core business of China State Shipbuilding Group, ship final assembly is mainly undertaken by listed companies China State Shipbuilding and China Heavy Industry, which belong to the original two groups. In terms of deadweight tons completed, the global market share of Chinese ships is about 11%, and it has four subsidiaries: Jiangnan Shipbuilding, Waigaoqiao Shipbuilding, CSSC Chengxi and Guangship International, focusing on the repair business of military and civilian ships. China Heavy Industry is in a leading position in ship research and development and manufacturing, and owns ship supporting enterprises such as Dalian Chuantui and Wuhan Heavy Industry.
As of the close of September 2, the price-to-book ratio of China Shipbuilding and China Heavy Industry was 3.20 and 1.35 respectively, and the market value was 156.1 billion yuan and 113.6 billion yuan, respectively, and the joint integration of two listed companies with A market value of more than 100 billion yuan constituted the largest merger and acquisition transaction in the A-share capital market in the past decade.
China Shipbuilding said that this reorganization, the military ship business will be better coordinated, civil ship business is expected to form a joint force, a total expansion of overseas markets, to achieve industrial operation and capital operation integrated development, mutual promotion, synergistic effect, to achieve complementary advantages.
It is conducive to enhancing overseas competitiveness
China Heavy Industry said in its semi-annual report in 2024 that the profitability of global shipbuilding enterprises has generally improved under the impetus of multiple positive factors such as strong market demand, sufficient orders and product structure optimization. In the first half of 2024, China Heavy Industry achieved operating income of 22.102 billion yuan, an increase of 31.05%, and net profit of 532 million yuan, an increase of 177.13%. China Shipbuilding achieved operating income of 36.017 billion yuan, an increase of 17.99%, and net profit of 1.412 billion yuan, an increase of 155.31%. Both companies doubled their performance.
From a nationwide perspective, in the first half of 2024, the three major indicators of China's shipbuilding industry led the world, and the share of ship enterprises receiving orders reached a record high. According to data released by the Ministry of Industry and Information Technology, China's shipbuilding completed 25.02 million deadweight tons, an increase of 18.4%; New orders received amounted to 54.22 million DWT, up 43.9% year-on-year; By the end of June 2024, hand-held orders were 171.55 million DWT, an increase of 38.6% year-on-year.
In the first half of 2024, Chinese vessels received a total of 109 orders for civilian vessels, with a year-on-year increase of 38.21% in tonnage, mainly including 35 oil tankers, 31 bulk carriers, 18 liquefied gas carriers, 14 PCTC vessels, and 10 container ships. China Heavy Industry's Marine transportation equipment sector received a total of 42.643 billion yuan of new orders, an increase of 230.6% year-on-year in terms of deadweight tons, and its shipbuilding enterprises such as Dalian Shipbuilding, Wuchang Shipbuilding and Beihai Shipbuilding have formed a number of superior ship types, such as Capesized bulk carriers, very large ore carriers, very large container ships, LR2 oil products carriers, VLCC and large LNG carriers.
In the hand-held orders, the proportion of high-end and green ship types of the two companies continued to increase. At the same time, China Heavy Industry said in its semi-annual report in 2024 that the shipping market rose at a high level under the influence of factors such as the Red Sea crisis, and factors such as periodic replacement of shipping capacity and green changes in the Marine industry continued to drive strong demand in the shipbuilding market, the shipbuilding industry maintained a high boom, and the price of new shipbuilding approached a historical peak. In June 2024, the Clarkson new Ship Price Index closed at 187.2 points, an increase of 3.8% from the beginning of the year and only 2.3% away from the 2008 peak, the second-highest level since 2008.
In the context of the continuous popularity of the shipbuilding market, China Shipbuilding Group promotes the deepening reform of China Shipbuilding and China Heavy Industry through market-oriented means, and this joint force is conducive to enhancing the overseas competitiveness of China Shipbuilding Group and the international influence of China Shipbuilding. China Shipping told reporters that after the completion of this restructuring, the company's asset size, operating income scale, handheld ship orders will lead the world.
China's gross profit margin edged up
In terms of China Shipbuilding's performance, on August 31, China Shipbuilding released its 2024 semi-annual report. In the first half of this year, the company achieved operating income of 36.017 billion yuan, an increase of 17.99%, and the net profit attributable to shareholders of listed companies was 1.412 billion yuan, an increase of 155.31%.
In the first half of 2024, due to the increase in the number of civilian ships delivered and the average price of a single ship, China's non-net profit turned from a loss to a profit of 1.198 billion yuan.
With the rapid increase in the production volume of hand-held orders, the net cash flow generated by China's ship operating activities turned from positive to negative, from 4.822 billion yuan in the same period of last year to -3.814 billion yuan, which made many investors question the company's cash flow. The company explained in the semi-annual report that due to the increase in investment in products under construction, the cash paid for the purchase of goods and the acceptance of labor services increased by 8.912 billion yuan year-on-year.
China ship secretary Tao Jian told the "Daily Economic News" reporter, operating cash flow from positive to negative indicates that the company's orders, in fact, the company's monetary funds are sufficient.
In addition, in the first half of 2024, the net cash flow generated by China's ship financing activities also turned negative from positive, mainly due to a decrease in the net new borrowings of the company compared with the same period last year. According to the balance sheet data, as of the end of the first half of the year, the company's borrowings were 16.883 billion yuan, a decrease of 32.95%, and monetary funds were 57.203 billion yuan, a decrease of 15.83%. The company said that the decrease in monetary funds and borrowings was due to the company's sufficient funds in hand, the change of financing structure, and the return of loans caused by more.
The reporter noted that although China's shipbuilding hand orders are sufficient, ship repair and Marine engineering business revenue of 34.446 billion yuan, an increase of 22.39%, but the gross margin of 7.64%, only an increase of 0.77 percentage points.
Why has the year-on-year increase in the average price of a single vessel not improved the company's overall profitability? China Shipping said that since 2024, under the support of the limited supply of available shipping places and other factors, the price of new ships has continued to rise, although the steel price of the ship delivered in the first half of the year has declined to a certain extent, but the labor cost has risen rigid, and the price of ship supporting equipment has also risen with the ship price.
In addition, if the final payment income of Waigaoqiao Shipbuilding to recover the offshore engineering platform in the first half of 2023 is excluded, the company's ship repair and offshore engineering business income can increase by 28.70% year-on-year, and the actual gross margin increases by 2.41 percentage points year-on-year.
Regarding the change in gross margin, Tao Jian told reporters that because some of the ships delivered this year are undertaken in 2021 and 2022, there are projects that are loss-making, if these loss-making projects are excluded, the gross margin of ship repair business can increase by 2 to 3 percentage points year-on-year. In the future, the trend of gross profit margin is bound to rise.
