54% equity of China Shipping Group’s ship assembly assets listing platform positioning further clarified

China Shipbuilding (600150): The adjustment of the major asset restructuring plan and the original plan’s indicators have only decreased by Guangzhou Shipyard International32.

54% equity of China Shipping Group’s ship assembly assets listing platform positioning further clarified

I. Event: On August 14, 2019, China Shipping issued an announcement to adjust the major asset reorganization plan.

The three steps of the adjusted plan were completed, and the original plan was only reduced by Guangzhou Shipyard International32.

54% equity, there is no significant difference.

China Shipbuilding will still serve as a listing platform for the ship’s final assembly assets of CSSC, and the positioning of the listing platform will be further clarified.

The company’s stock will resume trading tomorrow.

  2. Reasons for the adjustment of this major asset reorganization plan.

  The North and South Shipbuilding Group is planning to allocate strategic reorganization. In addition to the modification of the China Shipbuilding Defense Restructuring Plan, the China Shipbuilding Restructuring Plan will be modified accordingly; the market-oriented debt-for-equity swap project and the strategic restructuring of the shipbuilding industry will be accelerated; China Shipbuilding Group will be included in the core military and civilian shipsBusiness integration into listed companies will further strengthen the positioning of China Shipbuilding as a listing platform for ship and sea business; through this capital operation, China Shipbuilding will hold 100% equity of Jiangnan Shipbuilding and Guangzhou Shipbuilding International’s controlling stake, thereby solving the problem of some Chinese ships and China Shipbuilding.The issue of competition between the shipping group and its subsidiaries; from the original plan, CSSC Defense and the adjustment plan of China Shipping are easier to replace and operate, and the possibility of shareholders’ meeting is higher.

  Third, the main content of this major asset restructuring plan adjustment.

  Implementation steps: The original plan did not specify the implementation steps. The new plan clearly states that three steps are completed, and the three steps are not substitutes for each other.

In addition, CSSC Group promised to start Step 2 (ie, build a power platform) at the same time as the implementation of Step 1 (that is, China Shipbuilding issued shares to purchase assets and raise supporting funds); it also promised to wait for six months after the implementation of Step 1 and Step 2Step 3 (ie asset replacement) was initiated to eliminate competition between Chinese ships and CSSC defense.

The three-step process of asset reorganization is more clear and easier, and it is easier to operate.

  Scope of asset injection: After the completion of the three steps, Guangzhou Shipyard International 32 was reduced according to the original plan.

54% equity, but there are no major differences.

  CSSC Defence’s asset restructuring plan adjustments and changes: After the implementation of this plan 3, CSSC Defence will still serve as a listing platform for CSSC’s power assets, compared with the initial plan, Hudong Heavy Machinery, CSSC Power and other ship power assetsSynthetic newly established CSSC Power Group.

  Fourth, the impact of this major asset reorganization plan on listed companies.

  The positioning of the listing platform for the ship and marine assembly business of CSSC has been further clarified: through this major asset reorganization, the core military and civilian ship business of CSSC has been integrated into the listed company, and China Shipbuilding has further strengthened its positioning as a listing platform for ship and marine business.Synergy of ship and sea business.

  Injecting high-quality assets to enhance the core competitiveness of listed companies: The target company to be injected in this restructuring is Jiangnan Shipbuilding, Huangpu Wenchong and Guangzhou Shipbuilding International are in the military, and civil aviation repair and maintenance have core competitive advantages and industry advantages, which is conducive to improving the listingThe company’s shipbuilding and repairing sector layout strengthens its business competitive advantages and enhances the assets of listed companies.

  Reducing the competition between China Shipbuilding and CSSC and its subsidiaries, and enhancing business synergy: Through this capital operation, China Shipbuilding will hold 100% equity of Jiangnan Shipbuilding and Guangzhou Shipbuilding International’s controlling stake, thereby solving some Chinese shipsCompete with the industry peers of CSSC and its subsidiaries.

In addition, after the completion of the transaction, the listed company added new military ship repair and related businesses, the product business scope was further expanded, and the synergy of the ship and sea business was further strengthened.

  5. After the implementation of this asset reorganization plan, China Shipbuilding will still become the ship’s final assembly asset listing platform of China Shipbuilding Industry Corporation, and it will gradually become a military and civilian shipbuilding and repairing field with core competitive advantages.

  6. Investment suggestion: We believe that the civil ship is at the bottom of a long cycle and is now gradually recovering.

  As a leading company in China’s national shipping industry, the company will benefit from the gradual recovery of civil ships and the supply-side reform of the shipbuilding industry; at the high-level of the military ship, the company has established itself as a listing platform for the ship assembly assets of China Shipbuilding Industry Corporation, and will fully benefit from the construction of naval equipment.

We expect net profit for 2019-2021 to be 29.

32, 6.

95, 10.

44 trillion, EPS is 0.

66, 0.

16, 0.

24 yuan, corresponding to the current sustainable PE is 33X, 139X, 93X.

As the most beneficial target of the strategic reorganization of the North and South Shipbuilding Group, China Ships deserves attention.

  7. Investment strategy of the ship sector: We have exclusively recommended Chinese ships since the bottom of last year. The first quarter of this year clearly stated that we are optimistic about the performance of the ship sector. The logic comes from the historically low PB of several major ship assembly plants, and the civil ship is at the bottom of the long cycle.During the warming-up period, the ship segment performed well this year.

  At this stage, the investment logic of the shipping industry focuses on the replacement of restructuring schemes. The investment logic brought by the low PB and overfall at the end of last year is mutually transformed.

It is currently in the strategic reorganization stage of the North-South Shipbuilding Group and merged with the advancement of asset reorganization of the merged and listed company. We should pay attention to the opportunities for asset revaluation after the strategic reorganization of the North-South Shipbuilding Group. We should pay attention to, for example, China Shipbuilding, CSSC DefenseChina National Heavy Industries, etc. can refer to our series of in-depth reports.

  Eight, the investment strategy of the military sector: the current continued optimistic about the phase of the military industry Q3.

The main logic is: 1) From the perspective of balanced allocation, the value-added industry configuration is high, and it is now slightly loose, and military stocks are one of the optional industries; 2) From the perspective of industry growth, the certainty of maintaining steady growth is high, it is expected to be 19 yearsThe growth rate is around 20%, and the growth rate in the next year may be 15-20%. The prospect is relatively clear. 3) In terms of proportion, although the overall value 四川耍耍网 of the military industry sector has reached more than 40 times, the internal differentiation is large (there are also some 20 and 30).Companies with multiples of P / E), taking into account the upcoming conversion of multi-year forecasts, it is estimated to look at; 4) Eventual catalytic factors.

  In the configuration recommendations, the focus is on state-owned enterprise parts, OEMs, informatization, and civilian participation.  State-owned enterprise parts and components: continue to pay attention to such estimates as[Aviation Optoelectronics]and[Aerospace Appliances], and the performance growth rate matches the target; OEMs: We previously proposed that the ship was not optimistic in the first half of the year.

Now it is recommended to focus on[Zhongzhi shares],[AVIC Shenfei], and the opportunity of revaluation of the 北京夜网 ship’s underlying assets brought about by the strategic reorganization of the North and South Shipbuilding Group.Heavy Industry]etc .; Informationization: Focus on[Aerospace Development]; Civilian Army: Preferred targets with low estimates and basic support, dynamically adjusted according to the situation, currently focusing on[Torch Electronics],[Long Eagle Trust],[Chujiang New Materials]Wait.

  Nine, risk warning: uncertainty of the reorganization plan, risks in transaction approval, fluctuations in subsidiary performance, etc.