The highly anticipated listing of Hengli Heavy Industries has made new progress. On the evening of December 1, Guangdong Songfa Ceramics Co., Ltd. disclosed the draft transaction of the company’s issuance of shares to purchase the equity of Industries. According to the draft, the asset valuation of Hengli Heavy Industry to be placed in this transaction is RMB 8.006 billion. After the transaction is completed, Songfa Group will officially withdraw from the daily ceramic products manufacturing industry and comprehensively transform and upgrade to the world’s most promising shipyard.
The draft shows that Songfa intends to exchange all assets and operating liabilities held as of the valuation base date with the equivalent of 50% equity of Hengli Heavy Industry held by Beijing Zhongkun Investment Group Co., Ltd. At the same time, the company intends to purchase assets from the counterparty by issuing shares, including purchasing the difference of the above-mentioned major asset replacement from Zhongkun Investment, and purchasing the remaining 50% equity of Hengli Heavy Industry held by Suzhou Hengneng, Hengneng Investment and Chen Jianhua. In addition, Songfa intends to issue shares to no more than 35 specific investors to raise matching funds. The valuation of the assets to be disposed of in this transaction is RMB 513 million, and the valuation of the assets to be placed is RMB 8.006 billion.
It is worth noting that Hengli Heavy Industries’ asset-based valuation is RMB 8.006 billion, and its income-based valuation is RMB 9.724 billion. In the end, the company’s actual controller chose a lower valuation of RMB 8.006 billion as the price to inject into Songfa shares, and in the absence of mandatory performance betting under regulations, took the initiative to make a performance commitment based on a high-valuation income method financial forecast that the net profit attributable to the parent after deducting non-recurring items would be no less than RMB 4.8 billion in the three years from 2025 to 2027. Together with Hengli Heavy Industries’ existing net assets of RMB 3.1 billion, the valuation of RMB 8 billion is basically covered, fully protecting the interests of all shareholders of the listed company, especially small and medium-sized shareholders.
Songfa, before this transaction, the company is mainly engaged in daily-use ceramic products research and development, production and sales, the main products include daily-use porcelain, fine porcelain and ceramic bottles. Through this transaction, the listed company will strategically withdraw from the daily-use ceramic products manufacturing industry, Hengli Heavy Industry will become a wholly-owned subsidiary of the listed company. The main business of the listed company in the future will be the R&D, production and sales of ships and high-end equipment.
Songfa said that before this transaction, the company was mainly engaged in the research and development, production and sales of daily-use ceramic products, and its main products included daily-use porcelain, fine porcelain and ceramic wine bottles.
Through this transaction, the listed company will strategically withdraw from the daily-use ceramic products manufacturing industry, Hengli Heavy Industries will become a wholly-owned subsidiary of the listed company. The main business of the listed company in the future will be the R&D, production and sales of ships and high-end equipment.
The total amount of matching funds raised from this reorganization will not exceed RMB 5 billion. The listed company will make use of the funds raised in the capital market to accelerate the construction of “Green High-end Equipment Manufacturing Project of Hengli Shipbuilding (Dalian) Co., Ltd.” and “Internationalized Ship R&D and Design Center Project (Phase I) of Hengli Heavy Industries Co.
Since the announcement of the acquisition of Hengli Heavy Industries, Songfa shares ushered in 13 stops. on November 29, Songfa shares closed at RMB 53.42/share, the total market value of RMB 6.633 billion.