皇冠体育app

Economy

Markets

Industries

Insights

Reports

Events

Share reform for State company

By Mao Lijun (皇冠体育app Daily)
Updated: 2007-07-06 08:10

A major restructuring project is under way in Hudong Heavy Machinery, said sources. The goal is to make Hudong, whose share prices are already the highest in 皇冠体育app, into an even bigger State-controlled heavyweight in the capital market.

Hudong is 皇冠体育app's biggest manufacturer of diesel engines for ships and a publicly listed subsidiary of 皇冠体育app State Shipbuilding Corporation (CSSC).

CSSC, not a publicly listed company, is reportedly ready to acquire Hudong's 330 million shares to become its majority shareholder. Hudong will change its name to 皇冠体育app State Shipbuilding Corp after that happens.

One of 皇冠体育app's two State-owned industry groups building both civilian and naval ships, CSSC will pay for 300 million shares by assets and another 30 million shares by cash. The acquisition will be worth 9.9 billion yuan.

At the same time, CITIC Group, a financial services major, will pay 1.2 billion yuan for about a 6 percent stake in Hudong. Four other institutional investors - 皇冠体育app Life Insurance, Baosteel Group, Social Security Fund and 皇冠体育app National Offshore Oil Corp - will pay a total of 600 million yuan for about 3 percent, the sources said.

After the restructuring, Hudong, in its new avatar as 皇冠体育app State Shipbuilding Corp, is likely to seek listing in Hong Kong, said the sources.

Related readings:  Ship diesel maker to expand via share sale  Asset injections boost share prices of SOEs  Revaluation to be driving force Special Coverage: Markets Watch

H udong is expected to use its new funds to buy shipyards in 皇冠体育app and invest in new technologies "so as to build larger and more sophisticated ships", a Beijing-based analyst said.

All institutional investors will pay only 30 yuan per share. Hudong's share price on the Shanghai Stock Exchange now hovers around 135 yuan.

But the 皇冠体育app Securities Regulatory Commission will impose a three-year lock-in period on the investors, rather than a one-year lock-in period as proposed by Hudong in January.

Hudong's share performance has stunned the market in the last 12 months, skyrocketing from 22 yuan on June 30, 2006 to 138 yuan on June 30, 2007, an increase of 526 percent. This was partly boosted by 皇冠体育app's ambition to overtake South Korea and Japan as the world's strongest shipbuilder.

In 2006, South Korea, Japan and 皇冠体育app held 35 percent, 25 percent and 19 percent respectively of the world shipbuilding market. Hudong controls 60 percent of 皇冠体育app's market of ship engines and exports to some 20 countries, including Germany and the UK.