Bao Wu merger "small target": the next three years to capacity 16 million tons
Baoshan Iron and Steel Group, Wuhan Iron and Steel Group plans in 2016-2018 years, respectively, crude steel production capacity of 9.2 million tons, 4.42 million tons, respectively, for the next three years of planning, Baosteel said. In addition, it will increase the August 1 steel crude steel production capacity by 3 million tons. According to this calculation, the next three years, the new Bao Wu Group was set up to go to the task of production capacity of 16.62 million tons.
Baosteel Group and Wuhan Iron and Steel Group merger plan announced after the second trading day, the daily limit is already open, the market expectations, such as the car as a number of daily limit situation did not occur. These two state-owned enterprise reform program may not be comparable, but in the industrial level, the upcoming Po Wu Group's task list has been announced.
Recently, Baoshan Iron and Steel and Wuhan Iron and Steel shares were announced that the plan, in 2016 -2018 years, the two companies were to go to capacity 9.2 million tons and 4.42 million tons, with Bayi Iron and Steel additional capacity planning, the next three years, the new Of the Group after the establishment of Bao Wu, will go to more than 16 million tons of production capacity, "compared to the current capacity of the two groups, the equivalent of Bao Wu Group needs to remove about 25% of capacity," October 11, an anonymous steel industry brokerage Researchers on the 21st Century Business Herald reporter, said the pressure is not a small goal, but in the overall planning, is expected to complete this capacity planning task is not difficult.
Analysts said, as early as last year, Baosteel and Wuhan Iron and Steel shares have shut down part of the production capacity, the next three years to capacity planning is also within the scope of the two predictions. At present, the nationwide capacity to more than the previous long-term idle or shutdown production capacity, is expected before the end of this year, China can complete the capacity to target.
Not a favorable merger program
According to the Baowu merger plan, the conversion price of Baosteel Co., Ltd is RMB4.60 / share, and the price of Wuhan Iron and Steel Co., Ltd. is 2.58 yuan / share, thus confirming the share exchange between Wuhan Iron and Steel and Baosteel. Share ratio of 1: 0.56, or 1 per share of shares of Wuhan Iron and Steel shares can be exchanged for 0.56 shares of Baosteel shares.
"The merger program of the merger price and the cash compensation price are based on the suspension of 0.93 times the stock price to develop, if the choice of convertible, Wuhan Iron and Steel shares of small investors will receive the current share price of about 10% of revenue. "Securities analyst Jiang Yining, a group in a public research report pointed out that the shareholders to choose cash compensation is less likely, but this merger program for the two listed companies is not a good medium and small shareholders.
The same is true. October 10, the two companies resume trading after the stock, the day the word limit, but the closing the next day, Wuhan Iron and Steel shares late limit, but Baosteel shares rose 7.42%, "Baosteel's assets were more high-quality, more profitable. "A small shareholder of Baoshan Iron and Steel that the share price of Baosteel shares dragged down by Wuhan Iron and Steel.
Baosteel's data show that the first half of 2016, Wuhan Iron and Steel shares 28.85 billion yuan revenue, net profit of -1.29 billion yuan, the transaction is completed, the total assets of Baosteel will increase from the previous 266.265 billion yuan to 362.085 billion Yuan, but the asset-liability ratio will rise from 52.8% to 57.7%. However, Baosteel said that the asset-liability ratio is still below the industry average.
However, after the merger of Po Wu, planning is to create a more high-quality steel group. The two companies in their respective announcements also made it clear that after the merger of listed companies through the powerful combination will become the world's most competitive one of the iron and steel enterprises. Jiang Yining Securities analyst at the report pointed out that the combined output of crude steel Baowu more than 60 million tons, more than Hebei Iron and Steel, leapt to China first, second in the world, of which the new Bao Wu Group auto plate production in the world third , The orientation of silicon steel in the world, this integration can improve the scale of the new group at home and abroad visibility and brand effect.
How are benchmarks implemented?
In a new round of steel industry to production process, Bao Wu merger is considered a "sample case."
"The state hopes to Baowu Group integration and replication in the industry to promote." The brokerage researcher said that the current market sources pointed out that, including Angang and Benxi Iron and Steel's substantial restructuring program has been brewing, and other industry mergers and acquisitions Also in the process of preparation. The Baowu merger details and the implementation of the situation, will directly affect the follow-up to promote the reorganization between other peers, but also need to avoid the embarrassment of the whole situation but not the whole situation.
Unlike in the past, this Baowu merger more consideration to the synergies between enterprises. Analysts admitted that the previous Baosteel Group has integrated other iron and steel enterprises, but the performance point of view, the current can not be counted as a success. But this is because, in the previous process of restructuring the steel industry, many enterprises are not strong synergies between the product mix, and the regional steel industry is clear.
So synergies will play a follow-up Baoshan Iron and Steel Group and Wuhan Iron and Steel Group, an important integrated landing path. Both sides said that the external, through the procurement, sales, product development, technological innovation, corporate culture and other aspects of effective integration.
In terms of regional integration, the merged listed companies will have four production bases of Shanghai Baoshan, Nanjing Meishan, Zhanjiang Dongshan and Wuhan Qingshan. The Company will rationally distribute the surrounding areas through the adjustment of production structure, coordination of domestic logistics network and integration of global marketing service network. Market, can effectively reduce costs and improve customer demand response capabilities, comprehensive integration of steel location advantages.
"The product structure between Baosteel and Wuhan Iron and Steel is similar, and the region has complementary advantages." The researchers believe that this reorganization of the idea is not entirely out of line, between the two market restructuring needs are relatively more obvious , If the management in place, the management structure clear and effective, this synergistic effect can be more than in the past reorganization within the industry, but also can effectively avoid the whole situation.
The report also pointed out that, in addition to structural adjustment, the cost of the end of the merger after the Po Wu Group's iron ore demand will reach 100 million tons level, accounting for global iron ore trade volume of 5% of the three mines annual production of about 40% , Large-scale centralized procurement will increase the bargaining power of new companies on the upstream raw materials.
In the downstream sales side, Baosteel is located in the East China region, while the Wuhan Iron and Steel based in central China, the two steel enterprises in their respective regions have a high geographical advantage and brand advantage, the recent and in southern China are to establish a new production base, The merger will be synergies with their respective advantages of resources and marketing channels, and in their respective regions within the market to eliminate competition in the industry, the South China regional market will also be co-ordination, can improve the core competitiveness of the company after the reorganization.
However, this layout, Baosteel Zhanjiang project has been completed, and Wuhan Fangchenggang project has not yet ended, the latter part of the competition in the same industry under pressure, Fangchenggang project will continue to build? "At present, the Fangchenggang project is still in accordance with the plan to promote all," Wuhan Iron and Steel Group insiders pointed out, but how to promote follow-up in the end, there is no accurate information.
The future capacity to 16 million tons
The direct effect of the reorganization is to defuse excess capacity.
For the next three years of planning, Baosteel said, Baosteel Group, Wuhan Iron and Steel Group plans in 2016-2018 years were reduced crude steel production capacity of 9.2 million tons, 4.42 million tons. In addition, it will increase the August 1 steel crude steel production capacity by 3 million tons. According to this calculation, the next three years, the new Bao Wu Group was set up to go to the task of production capacity of 16.62 million tons.
"To complete this task is not difficult." The brokerage researcher said that after the Baosteel Group has been on the internal steel plate backward production capacity planning and action, and follow-up to the implementation of this landing to follow-up of the new group, this goal Not difficult to complete.
Analysts revealed that by the end of last year, Baosteel Group shut down eight iron and steel of 6 430 cubic meters of small blast furnace, Shaoguan Iron and Steel Group 420 and 450 cubic meters blast furnace. In addition, the withdrawal of Luo Jing steel production capacity of 3.45 million tons; Baosteel Special Steel shut down 100 tons of steel, steel production capacity of 500,000 tons out. Baosteel Group also shut down all steel production lines in Nantong. The Wuhan Iron and Steel shares in the first quarter of this year, shutting down a 150-ton converter, and in September this year shut down a blast furnace.
As of the end of July this year, the national steel industry to complete the task of production capacity only 47%. "But the follow-up to the completion of the task will speed up the completion of the task is expected to complete the task this year is not difficult." Institutional survey data show that as of the end of September this year, a total of 24 provinces and cities have identified 2016 iron and steel production capacity targets, The total reached 4059 and 8250.9 million tons. 2016 major provinces and cities and central enterprises will be compressed steel production capacity 90.88 million, iron production capacity of 43.78 million tons.
"Most of the provinces and cities to go to capacity for long-term production or idle capacity, the existing supply and demand fundamentals will not have an impact." Analysts said that at present, some provinces and cities have been completed ahead of schedule to target or task, Capacity targets can be basically completed. But the next few months, Hebei and other major steel-producing province of some of the planned capacity in the production capacity, some of the larger tasks and pressure, and its progress may have an impact on supply and demand fundamentals.