Article source: 21st Century Business Herald
The approval of the reorganization plan is one of Sinosteel's key deployments in the capital market. This year, Sinosteel Group is expected to make double-line efforts in new technology and new materials, as well as the “Belt and Road” overseas projects, helping the Group to further transform.
As the debt restructuring comes to an end, Sinosteel Group is also simultaneously promoting the business restructuring within the group.
Sinosteel Tianyuan (002057.SZ) recently disclosed that the company's major asset reorganization plan issued by the company to purchase 100% equity of Sinosteel Products Institute, Zhongwei Company and Hunan Special Material has been successfully approved by the CSRC.
The approval of the reorganization plan is one of Sinosteel's key deployments in the capital market. This year, Sinosteel Group is expected to make double-strength efforts in new technology materials and the “Belt and Road” overseas projects, helping the Group to further transform and turn losses into profits.
Integrating technology and new materials business
Sinosteel Group is a large-scale steel mine central enterprise directly managed by the State-owned Assets Supervision and Administration Commission of the State Council. It has two major listed platforms: Sinosteel International (000928.SZ) and Sinosteel Tianyuan. Among them, Sinosteel International's main business is metallurgical engineering, equipment integration, etc., while Sinosteel Tianyuan's main business is R & D, production and sales of magnetic materials and supporting equipment.
After the debt restructuring was successfully implemented last year, Sinosteel Group is further reforming and integrating its internal business segments to achieve group-level transformation and upgrading and turn losses into profits.
Sinosteel Tianyuan announced on the evening of the 8th that the company's major asset restructuring plan that has been brewing for 2 years has been successfully approved by the CSRC. The reorganization plan includes the issue of shares of listed companies to purchase 100% equity of China Steel Products Institute, China Wealth Company and Hunan Special Materials, and supporting the raising of 297 million yuan for capacity upgrades.
The actual controllers of the above three companies, such as Sinosteel Products Institute, are Sinosteel Group. According to the plan, the transaction prices of the three target companies, Sinosteel Products Institute, were 297 million yuan, Zhongwei Company was 60.327 million yuan, and Hunan Special Materials was 85.172 million yuan, totaling 443 million yuan. Sinosteel Tianyuan intends to issue approximately 35.87 million shares to the controlling shareholders of the three companies in order to pay the transaction consideration. After the transaction is completed, these three companies will become wholly-owned subsidiaries of listed companies, and high-quality material assets will also be smoothly injected into the listed platform.
A 21st Century Business Herald reporter reviewed Sinosteel Tianyuan's restructuring progress announcement for more than a year and found that Sinosteel Tianyuan's major asset restructuring plan has also undergone some adjustments, and it is not easy to pass the review.
In the earliest version of the reorganization plan in 2015, there were 4 companies to be acquired. In addition to the above 3 companies, it also included "100% equity of Sinosteel Investment Co., Ltd.", and the idea of reorganization was "new materials + finance". But in July last year, the above plan was withdrawn and adjusted. A month later, in August 2016, after the adjustment of the new restructuring plan was released, the acquisition target "Sino Steel Investment" was eliminated, and the restructuring idea was also adjusted to focus on the development of the new material's main business.
From the perspective of specific business operations, Hunan Special Materials is one of the leading players in the domestic magnetic material market segment, which overlaps with the main business of Sinosteel Tianyuan. The Industrial Securities Research report shows that the combined market share of Sinosteel Tianyuan, Hunan Special Materials, and Jinrui Technology exceeded 70%. After the reorganization, the listed company will become a leading company in the field of domestic soft magnetic materials, and its advantages in market promotion, channel coverage, and downstream pricing capabilities will be further enhanced. In addition, China Steel Products Institute's metal quality inspection and information services are also expected to bring new profit points to listed companies.
Based on the optimistic prospects for the magnetic materials business of the new material sector, Sinosteel Tianyuan also announced in the plan that it will raise 290 million yuan to support five major capacity enhancement projects for three subsidiaries of newly injected listed companies.
Regarding the performance prospects, Hunan Special Material promised to achieve at least a break-even in the restructuring plan; Sinosteel Products Institute and Zhongwei Company respectively promised that the net profit in 2017 will be no less than 36.46 million and 7.44 million.
Sinosteel Tianyuan's 2016 performance report released on February 28 shows that Sinosteel Tianyuan achieved revenue of 345 million yuan in 2016, an increase of 12.27% over the same period last year; net profit was 37.545 million yuan, an increase of 128.82% year-on-year.
Guo Yuan Securities analyst Yan Haojun believes in the research report that Sinosteel Tianyuan acquired three companies through a fixed increase. According to its performance commitments, the company's future performance will be greatly improved once it is successfully implemented. The company's 2017-2018 earnings per share are expected to be 0.40 yuan and 0.63 yuan, respectively.
Exploit markets along the “Belt and Road”
The integration of the material business sector and the injection of high-quality assets into listed companies are just one of a series of deployments in which Sinosteel Group reforms and restructures its business after debt restructuring.
2016 is a year for Sinosteel. This year, not only Sinosteel's troubled debt restructuring finally landed smoothly, but the prices of commodities that caused headaches for all mining companies also rose sharply. Sinosteel has also stepped up its internal business reform and integration on the occasion of external debt restructuring.
Looking back at the market two years ago, the comparison with today's popular black series is simply a two-day battle. As the steel industry fell into the coldest winter in 10 years, coupled with the poor management of the expansion in previous years, Sinosteel Group fell into debt distress in September 2014. After National Day of the year, the new leadership of Sinosteel Group took the lead in implementing a new round of restructuring of Sinosteel.
At the same time, under the coordination of the China Banking Regulatory Commission, the State-owned Assets Supervision and Administration Commission and other departments, the Bank of China took the lead in setting up a debt commission, and worked with Sinosteel to formulate a debt restructuring plan. On the morning of December 9, last year, Sinosteel Group and six major commercial banks, including the Bank of China, officially signed a debt restructuring agreement in Beijing to restructure Sinosteel Group's total debt and interest of more than 60 billion yuan. According to the 21st Century Business Herald reporter, the debt-to-equity ratio in the agreement accounts for about half of the total debt.
The reporter learned exclusively from Sinosteel's annual work meeting on January 18 this year that Sinosteel Group's further business integration and reforms after debt restructuring have begun, and initial results have been achieved in terms of hemostasis and weight loss. Operating profit for the current period in 2016 doubled compared to 2015. Data from the official website of the SASAC showed that Sinosteel realized a loss in 2016 and the total annual profit exceeded 200 million yuan.
At the annual working meeting, the leaders of Sinosteel Group put forward the operating goals and work priorities of the new year for each subsidiary. Among them, at the corporate management level, we must strictly control costs and reduce expenses; in terms of operations, Sinosteel will continue to strengthen and optimize the four major industries such as overseas mineral resources, engineering technology, high-end equipment, and new technology materials; in terms of capital operation , Also made a number of financing and business reorganization plans, the newly approved Sinosteel Tianyuan reorganization will be one of the major deployments.
In Sinosteel's most advantageous mining resource segment, 21st Century Business Herald reporter also exclusively learned that 2017 was the 30th anniversary of the establishment of the Cana Iron Ore Project, a joint venture between Sinosteel and Australian mining giant Rio Tinto Group. In the mining resources sector, the two parties are expected to further expand cooperation this year.
In terms of engineering business, Sinosteel International has continued to expand its overseas business in the past two years. In 2016 alone, the total number of new overseas contracts signed exceeded 13 billion yuan. As of the end of 2016, Sinosteel International had entered into force and had a total of approximately 30 billion contracts to be confirmed, which was more than 10 times the overseas revenue in 2015.
Previously, Sinosteel International's director revealed to 21st Century Business Herald that in the past, Sinosteel's metallurgical engineering companies were mainly located in West Asia, the Middle East, and South Asia in overseas markets. With the international metallurgical engineering market competition becoming increasingly fierce, Sinosteel On the basis of consolidating the existing traditional markets, it will step up efforts to develop markets along the “Belt and Road” in Russia, Africa, Latin America and even Canada, and continuously improve its international business layout.
At the meeting, Liu Andong, general manager and deputy secretary of Sinosteel Group, emphasized that by the end of 2017, Sinosteel Group will need to double its operating profit on the basis of 2016 on the premise of stable operating cash flow and active and steady progress in business restructuring. Fan's goal.