Zhenhua Hong Kong Machine will acquire Shanghai Hong Kong Machine by means of directional additional issuance

A few days ago, more than 70% of the global shore bridge market share of Zhenhua Port Machinery (600320) suddenly launched a expansion journey, the Huangpu River only 16 years of the establishment of the enterprise, will be through the way of directional issuance of Shanghai Port Machinery has been nearly 100 years old. The huge asset injection behind the actual hidden Zhenhua Hong Kong machine huge development strategy. This strategy includes the idea of increasing the output value of about 50 to 10 billion yuan per year in three years, finally reaching the annual operating income of about 50 billion yuan and realizing the net profit of about 5 billion yuan, and also involves the ambitious dream of "diversified Zhenhua ", which occupies 21 different heavy equipment fields.

At the time of its establishment in 1992, Zhenhua Hong Kong was surrounded by the giants of Japan and South Korea's various heavy industry enterprises, but it even put forward a seemingly distant goal —— There are containers in the world, there must be Zhenhua machinery and equipment. Today, the company's president, Guan Tongxian, said that the "global" slogan has been basically realized, the world has ports and can do business with all 67 countries and regions of the port, all standing Zhenhua machinery. However, this phenomenon also means that in the field of container lifting equipment has been "looking forward to invincible" Zhenhua port aircraft, have to seek breakthrough and transformation in a broader new field to support their huge leapfrog development plan. Market people analysis, zhenhua hong kong aircraft merger close to the same brother's plan, perhaps just the first step in the future to actively implement the merger strategy, is a series of grand goals to seek extension expansion of the voice.

Elimination of Interbank Competition: China Push "Two Hong Kong Mergers"

At the beginning of May, the reporter learned from the Shanghai Airport, which belongs to the Zhongjiao Group and is close to the same road, that the Hong Kong Airport Enterprise, which already has four bases, including Changxing Island, Zhangjiagang, Kangqiao and Nanhui, and occupies a huge market share in China, has just completed a new 470,000 square meter Changxing Island Base in March this year, with an annual capacity of 150 large port equipment and 150,000 tons of steel structure.

However, the expansion of Shanghai's capacity is not necessarily good for Zhenhua's Hong Kong and its parent company, Zhongjiao Group, due to the co-location of Shanghai and Zhenhua. Guan Tongxian told reporters, Shanghai and Zhenhua port aircraft due to the existence of peer competition, more or less to contain each other. In this context, China Jiao Group is determined to inject assets into Zhenhua Port Machine. According to people familiar with the situation, the group has promised investors that it will take three years to integrate competition in the same industry.

In 2007, more than 70% of the company's sales revenue came from overseas markets. And the container crane of Shanghai port machine basically sells in the Chinese mainland market. The main customers of Zhenhua Port Machine are international port operators such as Maersk Group, Rotterdam Port Authority of the Netherlands and national port management authorities, while the main customers of Shanghai Port Machine are Qingdao Port, Xiamen Port, Tianjin Port and other major domestic ports. It can be seen that the sales area and customer segmentation of Zhenhua Port Machine and Shanghai Port Machine are highly complementary. A brokerage researcher said the purchase of assets, is intended to integrate Shanghai's customer resources, further expand the company's domestic market share, strengthen the company's leading position in the industry.

However, the implementation of the project also encountered some industry researchers disagree. Some researchers said ," in the current situation, the integration of the two sides in the short term is not fully reflected ." Other researchers also said that because it will take some time for shanghai's hong kong-based aircraft to open up its performance release space after integration and the limited profitability of the shanghai-based aircraft itself, with a profit of less than 100 million yuan last year, the integration may increase shareholders' concerns about the profitability of zhenhua-based aircraft.

In this regard, Zhenhua Hong Kong Machinery said, can not simply view the integration of Shanghai Hong Kong Machinery from some indicators, if its production capacity into Zhenhua overall production system, can effectively expand the company's capacity. In support, Guan said the company's original output value target for 2008 is 25 billion yuan, if the Shanghai Hong Kong Machinery Factory successfully incorporated, can increase the output value of 3 billion to 35 billion yuan, plus new production projects, Zhenhua Port Machinery intends to raise the output value target to about 30 billion yuan.

Borrowing Power from Shanghai Airport: Zhenhua Jump into New Areas

In addition to the Hong Kong machinery capacity "icing on the cake ", in Zhenhua's eyes, the acquisition of Shanghai Hong Kong Machinery has more far-reaching significance.

Guan said the global container crane market in recent years under the strong expansion of Zhenhua port aircraft, after all, is close to equilibrium. Zhenhua port machinery has proposed four new business areas in 2006, such as heavy machinery at sea, large steel structure, port machinery fittings and bulk cargo handling machinery. At present, bulk cargo parts and heavy equipment at sea have rapidly developed into the second and third main business of the company. In 2007, the operating income of the two products accounted for 11.14% and 6.87% of the company's main business income, respectively. However, with the further expansion of the new business, the company is facing a new business capacity constraints, although the company in 2007 to ease the problem of refinancing, and the current financing has been basically invested, but the company still hopes to continue to expand its production capacity, has accelerated to seize and consolidate these emerging markets.

At this critical moment, the Shanghai port machine with several large bases gives Zhenhua the imagination of "borrowing power ". It is reported that the scale of the Changxing base of Shanghai port aircraft is now second only to the scale of the Changxing base of Zhenhua port aircraft, and the two major bases are closely adjacent. The Shanggang base includes a 650-meter-long deep water bank and mu production base, which already has an annual capacity of 150 large port equipment and 150000 tons of steel structure. In China's largest Changxing heavy equipment base, which is a "slumbering" production capacity, once integrated into Zhenhua's overall production system and matched with its snowflake-like orders, it can undoubtedly rapidly expand the company's capacity and support the further expansion of the company's two major new business areas.

In addition, the layout of Zhenhua port machine is more than that, with the Shanghai port machine different from Zhenhua's unique products and orders, Zhenhua also tried to enter a new field that has not been entered before. Zhenhua company people told reporters that after the completion of this issue, the company will enter the rail transit construction equipment market and railway construction equipment market through Shanghai port machine, further expand the company's product line, thus enjoying the "11th Five-Year Plan "period of China's high-speed railway construction plan investment of 1.2 trillion yuan brought new market opportunities.

At present, Shanghai has successfully entered the market of rail transit construction equipment and railway construction equipment, and has developed and manufactured various tunnel roadheaders and hundreds of tons of railway bridge erectors and other railway construction equipment, according to Shanghai port aircraft sources. There are now 29 rail transit construction equipment and railway construction equipment that have not yet been delivered, including 19 high-speed rail equipment for the Hada Line ,5 high-speed rail equipment for equipment for Beijing-Shanghai High-speed Railway and 5 shield equipment for urban rail transit construction in Shanghai and Tianjin.

At present, the process of integrating Shanghai's Hong Kong aircraft is taking three steps: the first step is trusteeship, the custody of its property and business activities, but the two sides are still two legal persons; the second step is the integration of assets after the completion of the acquisition of targeted additional issuance; and the third step is cultural integration, including the integration of management and technology between the two sides ." This process will be relatively long and may last four or five years ."

Reporter learned that after the assets injected into Zhenhua, China Communications Group will have no subsequent Hong Kong assets to be injected.

Behind the 50 billion blueprint: external mergers and expansion

In 2000, Zhenhua Port Machine, which has been established for the eighth year, completed 2 billion yuan of output value, and then achieved 21 billion yuan of output value last year, which took another eight years, while from 21 billion yuan to 50 billion yuan, Zhenhua was determined to achieve it in three years.

But analysts said that companies with their own hematopoietic function and new production capacity model, can only achieve snowball-style steady growth, but will not achieve leapfrog capital magic cube. Zhenhua's 50 billion yuan blueprint should be used alternately by endogenous growth and extension expansion through the dual cooperation of industrial capital and financial capital. From this point of view, today's Zhenhua absorption of Shanghai Hong Kong aircraft move, perhaps only in the future Zhenhua large-scale merger and acquisition test water and microcosm.

Fifty billion yuan, falling on the paper is only a monotonous number, but for our heavy industry, such a large output value is an astronomical figure, most enterprises are difficult to cross.

In line with the high output growth target, is Zhenhua has now spread the high investment. Guan said that in the manufacturing sector, making 10 billion yuan in output value requires 5 billion yuan in fixed assets investment, because infrastructure investment has a certain lag in economic benefits. At present, Zhenhua Hong Kong Machinery has 10 manufacturing bases in the Yangtze River Delta region, so Zhenhua is investing 8 billion yuan this year, and will increase its sales revenue by 16 billion yuan in a year's time and increase its profits to 1.6 billion yuan.

In high investment at the same time, Zhenhua Port aircraft is also considering mergers. Guan said that although zhenhua had been relying on its own accumulation to take the road of endogenous development, but "the future development must go to capital management, the development of soft power, can not always rely on industrial management ", extension expansion this road must go, because" do what must be bigger, do not do, the competitiveness that has been formed will be eroded by others soon ". Therefore, Zhenhua Hong Kong Machinery put forward the output value of 40 billion and 50 billion in the following year, in addition to self-built capacity to achieve, through the extension of mergers and acquisitions has also become an important path.

Guan Tongxian to the reporter calculated an account: in the capital and manpower-intensive heavy equipment manufacturing field, to achieve 100 million yuan output value needs 1500 people, to achieve 10 billion yuan output value, need 15,000 people, to achieve 40 billion people, about 60,000 people, Zhenhua can not support so many people, so must rely on other means. But Guan Tongxian stressed that mergers and acquisitions will soon expand output value, but also easy to bring profit margin reduction ," but good mergers can increase profits, investors do not have to worry that if we merge in the future, will not only focus on output value, but more on profit ".

Steel :20 New Directions for Zhenhua Tree

Guan Tongxian said that the container crane market alone, in any case can not support Zhenhua tens of billions of yuan of operating income, must enter the broad market. Reporter found that compared with 2006 Zhenhua proposed six major market strategy, Zhenhua today put forward to enter and occupy 20 markets with broad prospects.

Besides the container crane market in which Zhenhua has been rolling for more than ten years, Zhenhua's main focus now includes bulk cargo handling machinery such as ore and coal, large steel beams, heavy offshore equipment, heavy onshore equipment, port machine fittings, dredger market, excavation shield market, railway machinery market, large offshore engineering ship, and Zhenhua's original products, now lost ground —— gantry cranes.

Guan said ," in addition, we have prepared ten new economic growth points, is in the process of cultivation ", including offshore platform transport ships, power positioning devices for offshore ships, large anchor winch, deep water pipe laying ship, offshore large wind power equipment installation, large bearings, non-standard large speed reducer, and alternative dock flat ground shipbuilding equipment. He stressed ," we plan these markets will not be a flash in the pan, are good markets ."

Among them, Shanghai port machinery for a number of areas of access to facilitate, including shield, railway machinery, dredger and so on can be produced by the port machinery factory.

Wanke as the representative of the promotion of focus on the main business of today's popular business theory, Zhenhua Hong Kong machinery re-" diversification "will bring the main business is not prominent, each auxiliary industry is weak dilemma? Guan Tongxian to this doubt expressed negative. He said, in fact, behind these complex markets, the essence is "steel-oriented" steel construction, Zhenhua has the ability to control these 21 markets at the same time development ," we have ten core competitiveness, with a trained engineering team trained for many years, in addition, our most fundamental advantage is the ability to control the market, including steel price increases, exchange rate changes and other changes affecting costs and benefits, we have a way to control ."

In addition, Guan said that Zhenhua also has its own center of gravity in these 20 emerging markets. At present, it is particularly concerned about the offshore heavy equipment market, especially the offshore engineering ship, which is the main target of Zhenhua port aircraft ." Last year, the global offshore oil and gas equipment investment of $300 billion, we got one percent of the contracts, did not grow ?"

A reporter came to the Changxing Island base of Zhenhua Port Airport on May 7 to witness the birth of one of Zhenhua's newly built marine engineering ships —— the world's first 7500-ton fully rotary self-propelled floating crane, which is an important escort equipment for offshore oil and gas fields and can easily lift the Eiffel Tower with a single unit worth 1.5 billion yuan. South korea's samsung heavy industry has ordered a 8000-ton floating crane, and a larger 28000-ton floating crane has been in talks with dutch buyers. Most of the world's large floating crane orders are now under the name of the port of Zhenhua, zhenhua executives said on the scene. Guan Tongxian is to Zhenhua has quickly started the offshore equipment business expressed confidence ," business operation, for the market development, to eat one, hold one, think of one. Just eat this one, you can't survive. China Machinery Information Network