Daye Special Steel Intends To Purchase An 86.5% Stake In Xingcheng Special Steel For Rmb 23.182 Billion

Because of the proposed purchase of shares in Xingcheng Special Steel held by Taifu Investment, the shares of Daye Special Steel (000708) will be suspended from December 25, 2018. On the evening of January 2, Daye Special Steel announced that it planned to make a price of 23.182 billion yuan to purchase Taifu Investment, Jiangyin Xintai, Jiangyin Yetai, Jiangyin Yangtai, Jiangyin Qingtai and Jiangyin Xinfu. The 86.50% stake in Xingcheng Special Steel is issued at 10 yuan/share.

Before the transaction, the controlling shareholder of Daye Special Steel was Xinye Steel, the actual controller was CITIC Group, and the other party’s investment in Taifu was the other legal person controlled by CITIC Group, the actual controller of Daye Special Steel. After the completion of the transaction, the actual controller of the listed company is still CITIC Group.

Daye Special Steel belongs to the special steel industry. It mainly produces gear steel, bearing steel, spring steel, tool steel, high temperature alloy steel, high speed tool steel and other special steel. It has more than 1,800 varieties and specifications, and its products are widely used. Aviation, aerospace, oil mining and other industries and fields. Daye Special Steel achieved net profit of 293 million yuan, 395 million yuan and 380 million yuan in 2016, 2017 and January-September 2018, respectively.

As the target of this acquisition, Xingcheng Special Steel is a highly specialized special steel production enterprise. Through the procurement-production-sales-R&D linkage production and operation activities, it forms a strategic layout along the coast of the Yangtze River. The products sell well throughout the country and are exported to the United States and the European Union. More than 60* and regions such as Japan and Southeast Asia. Xingcheng Special Steel achieved a net profit of 1.384 billion yuan in 2017 and a net profit of 3.157 billion yuan in January-October 2018.

A background that cannot be ignored is that in November 2016, the “13th Five-Year Plan* Strategic Emerging Industry Development Plan” was released, and proposed to further develop and expand strategic emerging industries such as high-end equipment and new materials. In December 2016, the Ministry of Industry and Information Technology and other ministries jointly issued the “Guidelines for the Development of New Materials Industry”, proposing to promote the structural reform of the supply side of the raw material industry, focusing on the needs of key areas such as high-end equipment manufacturing, and accelerating the key tasks of adjusting the structure of advanced basic materials products. .

From the perspective of the supply side, China’s special steel products account for a relatively low proportion of total steel products, and mainly mainly for low-end and medium-end products, and the supply of high-end special steel is insufficient. At present, China is transforming from a big manufacturing country to a manufacturing power. In the future, with the gradual deepening of China’s economic structure optimization and adjustment, the manufacturing industry will continue to transform and upgrade. The high-end manufacturing industry represented by nuclear power industry, high-speed railway and automobile industry will usher in a fast and achievable Continued development is expected to further stimulate the demand of medium and high-end special steel.

If the transaction can be successfully completed, then the special steel production capacity of Daye Special Steel will reach 13 million tons, and it will have more than 3,000 steel grades and more than 5,000 specifications, which will become the scale* and product scale of the whole world. Specialized special steel production enterprises reflect the polymerization effect of existing special steel brands, enhance the comprehensive competitiveness of enterprises, increase the production capacity and market share of special steel, and further enhance the leadership and discourse power in the special steel industry.

At the same time, through this transaction, Xingcheng Special Steel will be included as a holding subsidiary in the consolidated statement of Daye Special Steel, thereby significantly reducing the related transactions between Daye Special Steel and Xingcheng Special Steel, and will effectively solve The potential for horizontal competition between the two.

In particular, it is worth mentioning that through this transaction, the assets of the CITIC Group’s special steel plate will be listed on the A-share market as a whole, and the asset securitization level of the A-share will be greatly improved. In the future, Daye Special Steel can broaden its financing channels and conduct industry integration through various means.

Today, Daye Special Steel resumed trading. In early trading, Daye Special Steel opened at the daily limit price, but soon opened the daily limit. As of the e-company press release, Daye Special Steel reported at 9.53 yuan, up 0.76 yuan, or 8.32%.

Post time: Mar-16-2019
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