On October 22, Xingmin Intelligent Transportation Systems (Xingmin ITS), a China auto parts company listed on the Shenzhen Stock Exchange, issued two announcements in succession, announcing its cross-border entry into the shipbuilding industry.
Xingmin ITS issued the “Announcement on the Proposed Acquisition of 30% Equity of Zhejiang East Coast Shipbuilding Co., Ltd.”, and its holding subsidiary Xingmin Haizhi Equity Investment intends to acquire 30% equity of Zhejiang East Coast Shipbuilding Co., Ltd., a wholly-owned subsidiary of Yangfan Group Co., Ltd., in cash. According to the results of the preliminary audit by the auditing agency and the preliminary evaluation by the evaluation agency, the estimated value of 30% equity in East Coast Shipbuilding is approximately RMB 360 million (approximately US$76.9 million).
East Coast Shipbuilding is equipped with a medium-sized dock and an outfitting wharf, and has the ability to build various types of ships below 100,000 tons. Its main products include large and medium-sized car carriers (PCTC), large and medium-sized container ships, large and medium-sized bulk carriers, small and medium-sized chemical tankers, handy multi-purpose ships, ultra-low temperature tuna fishing boats, ocean fishing vessels, small and medium-sized firefighting and tugboats, etc.
The announcement disclosed that Xingmin Haizhi Equity Investment and Yangfan Group jointly signed the “Equity Transfer Framework Agreement”, and the tentative transaction price of the equity was RMB 360 million. After the completion of this transaction, the company will add the shipbuilding industry while maintaining its main business, which will help the listed company seek new profit growth points and further improve the company’s sustainable operating capabilities.
According to the announcement, in 2022 and 2023, East Coast Shipbuilding’s operating income will be RMB 341 million and RMB 343 million respectively, and its losses will be RMB 148 million and RMB 169 millionrespectively; in the first eight months of this year, its revenue was RMB 266 million and its losses were RMB 93.7 million. As of August 31, East Coast Shipbuilding’s total assets were 1.477 billion yuan (about 315 million US dollars) and its net assets were 1.108 billion yuan (about 237 million US dollars).
According to Yangfan Group’s official website, the shipbuilding company was founded in 1952 and was acquired by Beijing Jianlong Heavy Industry Group in August 2006, becoming a business unit of Jianlong Group. Yangfan Group’s affiliated shipyards include Zhejiang East Coast Shipbuilding and Zhoushan Dashenzhou Shipbuilding. The annual shipbuilding capacity reaches 1.5 million deadweight tons.
Xingmin ITS stated that in order to ensure the profitability and sustainable operation of East Coast Shipbuilding, Xingmin Haizhi Equity Investment and its subsidiary have signed a cooperation agreement with Wuhu Shipyard that: the three parties agreed that in the next five years, Wuhu Shipyard will entrust Xingmin Haizhi Equity Investment to complete some of its existing and future new shipbuilding orders in the form of commissioned processing, joint manufacturing, and joint selling.
Signed a subcontracting cooperation agreement for 37 new ships
On October 22, Xingmin ITS simultaneously issued an announcement, disclosing that its subsidiary Xingmin Haizhi Equity Investment, Anhui Xin Yangfan Shipbuilding (Xin Yangfan) and Wuhu Shipyard signed a cooperation agreement.
The announcement disclosed that Xingmin Haizhi Equity Investment, Xin Yangfan and Wuhu Shipyard signed a 5-year cooperation agreement. According to the agreement, Wuhu Shipyard agreed to entrust Xingmin Haizhi and Xin Yangfan to build some of the shipbuilding orders it has undertaken or will undertake in the future. The order entrustment methods include but are not limited to entrusted processing, joint manufacturing, joint seller cooperation, etc., and the order price follows the market.
Specifically, the three parties will carry out business cooperation on 37 ships of various types, including 8 89K bulk carriers, 1 7000PCTC, 1 14600 heavy lift ship, 6 38K stainless steel chemical tankers, 4 49K petrochemical tankers, 7 50K petrochemical tankers, and 10 27650DWT multipurpose ships from 2025 to 2029.
Among them, in 2025, business cooperation totaling US$424 million will be carried out including 8 89K bulk carriers and 1 7000PCTC.
The announcement further disclosed the cooperation in shipbuilding and material procurement. Wuhu Shipyard entrusted Xingmin Haizhi and Xin Yangfan with the shipbuilding business. The materials required for construction can be entrusted to Xingmin Haizhi and Xin Yangfan for procurement. The purchased materials are temporarily limited to steel, structural section, pipes, welding materials, cables, and paints. Wuhu Shipyard will gradually open up the scope of material procurement to Xingmin Haizhi and Xin Yangfan according to the cooperation between the three parties, including main engines and other shipborne equipment and facilities. The specific shipbuilding business and ship material business entrusted by Wuhu Shipyard shall be subject to the relevant contracts signed by the three parties.
Xingmin Haizhi was established on March 18 this year and is mainly engaged in equity investment business. Xin Yangfan was established on September 24 this year with a registered capital of 20 million yuan. It is a wholly-owned subsidiary of Xingmin Haizhi and its business scope includes metal shipbuilding, etc.
Xingmin ITS is mainly engaged in steel wheel business and intelligent driving services, among which steel wheel business is the company’s core business. On October 14, Xingmin ITS’s holding subsidiary Yesway Information Technology announced that it plans to acquire Zhuhai SV Tech, a drone manufacturing company, to develop low-altitude economy. With this cross-border shipbuilding, Xingmin ITS’s business will cover all areas of “sea, land and air”.
