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the super giant of china's shipbuilding industry is coming!

on the evening of september 2, the two giants of china's shipbuilding industry, china shipbuilding (600150.sh, share price 34.9 yuan, market value 156.088 billion yuan) and china heavy industry (601989.sh, share price 4.98 yuan, market value 113.554 billion yuan) both issued announcements stating that the two parties are planning a major asset reorganization in which china shipbuilding will absorb and merge china heavy industry.

it is reported that this is the largest m&a transaction in the a-share capital market in the past decade. as soon as the news came out, the stock market was instantly boiling, and some stockholders shouted: "the chinese magic ship is coming!"

it is worth mentioning that both china shipbuilding and china heavy industry experienced sharp declines on september 2. as of the close, china shipbuilding fell by more than 9% to 34.9 yuan, and china heavy industry's share price was 4.98 yuan, a sharp drop of 6.39%.

china shipbuilding will absorb and merge china heavy industry

profits doubled in the first half of the year

on the evening of september 2, china shipbuilding announced that in order to further focus on the country's major strategies and the main responsibilities and businesses of strengthening the military, accelerate the high-quality development of ship assembly business, regulate competition among peers, and improve the operating quality of listed companies,the company and china national heavy industry corporation are planning to merge china national shipbuilding corporation by issuing a shares to all shareholders of china national heavy industry corporation.。

this transaction constitutes a related-party transaction and is expected to constitute a major asset reorganization as stipulated in the "administrative measures for major asset reorganization of listed companies". this transaction will not lead to a change in the actual controller of the company. as this transaction is still in the planning stage and there is still uncertainty about the relevant matters, upon application by the company, the company's securities will be suspended from the opening of the market on september 3, 2024 (tuesday), and the suspension is expected to last no more than 10 trading days.

at the same time, china heavy industry also issued an announcement stating that the company and china shipbuilding are planning to merge china heavy industry by issuing a shares to all shareholders of the company. this transaction constitutes a major asset reorganization and will not lead to a change in the actual controller of the company. the company's stock will be suspended from the opening of the market on september 3, and the suspension is expected to last no more than 10 trading days.

it is worth noting that china shipbuilding and china heavy industry are both large shipbuilding companies with a market value of over 100 billion yuan under the state-owned giant china shipbuilding group.

public information shows that china state shipbuilding corporation (hereinafter referred to as china shipbuilding) is a listed company with core military and civilian products business of china state shipbuilding corporation. it integrates the large-scale shipbuilding and repair, electromechanical equipment, marine engineering and other businesses of china state shipbuilding corporation, and has a complete industrial chain of the shipbuilding industry. the company has four subsidiaries: jiangnan shipyard (group) co., ltd., shanghai waigaoqiao shipbuilding co., ltd., cssc chengxi shipbuilding co., ltd. and guangzhou shipyard international co., ltd.

china shipbuilding industry corporation (hereinafter referred to as china shipbuilding) was approved by the state-owned assets supervision and administration commission of the state council, and was established by china shipbuilding industry corporation (reorganized with china shipbuilding industry corporation in 2019 to form china shipbuilding group), anshan iron and steel group corporation, and china aerospace science and technology corporation as sponsors. it was registered with the state administration for industry and commerce on march 18, 2008. according to the approval of the china securities regulatory commission, the company issued 1.995 billion shares to the public in december 2009. on december 16, 2009, the company was listed on the shanghai stock exchange.

in the first half of 2024, the shipping market will rise to a high level due to factors such as the red sea crisis. factors such as cyclical replacement of shipping capacity and green transformation of the maritime industry will continue to drive strong demand in the shipbuilding market, and the shipbuilding industry will maintain a high level of prosperity.

affected by this, the performance of china shipbuilding and china heavy industry both doubled in the first half of 2024. during the period, china shipbuilding achieved operating income of 36.017 billion yuan, a year-on-year increase of 17.99%, of which the operating income of shipbuilding and marine engineering business was 34.446 billion yuan, a year-on-year increase of 22.39%; and achieved a net profit attributable to the parent of 1.412 billion yuan, a year-on-year increase of 155.31%.

at the same time, china heavy industry achieved operating income of 22.102 billion yuan, a year-on-year increase of 31.05%; and achieved net profit attributable to shareholders of 532 million yuan, a year-on-year increase of 177.13%.

the industry generally believes that 1+1>2

"a milestone in significance"

according to china fund news, since the merger of "north and south shipbuilding" in 2019, the market believes that there is business overlap between china shipbuilding and china heavy industry in the field of ship assembly, and there is room for integration.

it is reported that this reorganization will integrate the advantageous scientific research and production resources and supply chain resources of china shipbuilding and china heavy industry, promote the deep integration and upgrading of advanced technologies in shipbuilding and repair, promote the deepening of reforms of china shipbuilding, china heavy industry and their affiliated companies through market-oriented means, improve the governance structure and governance capabilities, realize the integrated development of industrial operations and capital operations, promote each other, give play to synergy effects, and achieve complementary advantages.

after the restructuring is completed, the surviving listed company will become the world's largest flagship shipbuilding listed company leading the world in asset scale, operating income scale and number of ship orders on hand. in the future, it will seize industry opportunities, enhance its global industry influence, and continue to lead the development of the global shipbuilding industry by relying on its strong scientific research and innovation capabilities, advanced management level, exquisite manufacturing technology, rich product structure and production lines, thus laying a solid foundation for china shipbuilding group to become a world-class shipbuilding group and a leader in the global shipbuilding industry.

according to cailianshe, industry insiders said that this reorganization will solve the problem of intra-industry competition between china shipbuilding and china heavy industry, and promote the professional and systematic development of each member unit of china shipbuilding group.

market participants generally believe that the reorganization of china shipbuilding and china heavy industry is of milestone significance to china's shipbuilding industry. this will not only further consolidate china's leading position in the global shipbuilding industry, but also provide a more solid guarantee for the country's strategy of strengthening equipment and military. with the deepening of state-owned enterprise reform and the accelerated emergence of new productive forces, such an important merger and reorganization will set a benchmark for future industrial integration.

industry insiders said that considering that the specific arrangement of the cash option for dissenting shareholders has not yet been formulated in the merger plan between china shipbuilding and china heavy industry, the decline in stock prices before the restructuring may have a certain impact on the final design of the option. the company needs to find a balance when setting the price, that is, to ensure that the price of the cash option can protect the rights and interests of dissenting shareholders while not causing the company to bear too heavy a financial burden due to excessive prices. in addition, the expectations of small and medium shareholders for cash options may also be lowered due to the decline in stock prices. the company needs to be more cautious when formulating relevant terms to ensure broad support from shareholders and the smooth progress of the merger transaction.

it is worth noting that about 10 years ago, when china south locomotive and rolling stock corporation and china northern locomotive and rolling stock corporation merged to form china cnr corporation, an epic market trend was created. on the evening of december 30, 2014, china south locomotive and rolling stock corporation and china northern locomotive and rolling stock corporation officially announced that the two parties would merge by exchanging shares of china south locomotive and rolling stock corporation for shares, and china cnr corporation limited was officially born. subsequently, china cnr corporation limited's stock price continued to rise by the daily limit; in april 2015, after the merger was approved, the stock price soared again. in just half a year, due to the significant benefits of the merger, the stock price increased nearly 10 times, from more than 4 yuan to nearly 38 yuan, and was hailed as the "chinese god car".

what effect will the merger of china shipbuilding and china heavy industry achieve? how will the stock price move? we will wait and see.

(this article does not constitute investment advice, and you are responsible for your own operations)

edit|||duan lian gai yuanyuan

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cover image: visual china (image and text are unrelated)

daily economic news is compiled from announcements of listed companies, china fund news, securities times, cailianshe, public information, etc.

daily economic news