On January 24, China State Shipbuilding Corporation Limited (CSSC) and China Shipbuilding Industry Corporation (CSIC) announced that the reorganization plan of CSSC’s share swap and merger with CSIC had been reviewed and approved by the boards of directors of both parties, and announced the draft restructuring report.
On September 2, 2024, CSSC and CSIC initiated the merger and reorganization, with an estimated total transaction price of over RMB 110 billion. So far, the reorganization has been approved by the State-owned Assets Supervision and Administration Commission of the State Council and other competent authorities, which have agreed in principle to the overall plan of the transaction. According to the reorganization report disclosed by both parties, CSSC, as the surviving company after the merger, will eliminate the competition with CSIC.
After the completion of this reorganization, the positioning of CSSC as a core military and civilian shipbuilding assembly listed platform under China State Shipbuilding Corporation (CSSC) is further determined, and the major core shipbuilders under CSSC, including Jiangnan Shipyard, Dalian Shipbuilding Industry Corporation(DSIC), Shanghai Waigaoqiao Shipbuilding (SWS), Wuchang Shipbuilding Industry Group Co.,Ltd (WS), Guangzhou Shipbuilding International (GSI) and Beihai Shipbuilding, will be fully integrated into the merged CSSC. CSSC has clearly committed to inject Hudong-Zhonghua Shipbuilding into CSSC within three years.
According to the reorganization report, the total assets of the merged CSSC will be close to RMB 400 billion, with annual revenue exceeding RMB 120 billion, and will continue to lead the development of the global shipbuilding industry. The merged CSSC will integrate the resources of both parties, optimize the industrial layout of the shipbuilding sector, give play to the synergy effect, effectively enhance the core functions of the surviving company, enhance its core competitiveness, comprehensively promote the development of the shipbuilding industry towards high-end, green and intelligent, and create a world-class shipbuilding enterprise with international competitiveness.
On the evening of January 24, CSSC and CSIC also simultaneously disclosed the 2024 full-year earnings forecast announcement, and both listed companies achieved rapid growth in performance.
CSSC expects net profit from non-deductible to be RMB2.73 billion to RMB3.43 billion in 2024, a turnaround from 2023; net profit from attributable sources is expected to be RMB3.3 billion to RMB4.0 billion in 2024, an increase of RMB343 million to RMB1,043 million compared to the same period in 2023. As of the end of June 2024, CSSC’s cumulative civil ship orders on hand amounted to 322 units and 23,621,800 DWT.
CSSC and CSIC are both leading enterprises in China’s shipbuilding industry. This transaction can further integrate the advantageous resources of both parties, give full play to the synergy effect, help the surviving company seize the opportunity of the transformation and upgrading of the shipbuilding industry, build a world-class shipbuilding enterprise, and become a leading force in the development of the global shipbuilding industry.