When the restructuring of the domestic steel industry is in progress.
Recently, Lingyuan Iron and Steel Co., Ltd. announced that it had received a notice from the controlling shareholder Lingyuan Iron and Steel Group Co., Ltd. (hereinafter referred to as "Lingyuan Iron and Steel Group") that Anshan Iron and Steel Group Co., Ltd. (hereinafter referred to as "Anshan Iron and Steel Group") was planning to reorganize with Lingyuan Iron and Steel Group, which may lead to the change of the actual controller of Lingyuan Iron and Steel Co., Ltd.
Linggang related person told the reporter of China Business Daily: "The actual controller of Linggang is the state owned assets supervision and Administration Commission of Chaoyang City, Liaoning Province, so the reorganization is currently being discussed by the Chaoyang municipal government with Angang Group, and Linggang and Linggang group are not involved. The specific impact on Linggang after the reorganization depends on how Angang Group arranges. But on the whole, having a strong controlling shareholder should be a good thing for Linggang."
Plan reorganization
Linggang Co., Ltd. is located in Lingyuan City, Chaoyang City, Liaoning Province, and the controlling shareholder is Linggang group, which holds 35.52% of its shares.
"Lingyuan City, where Linggang Co., Ltd. is located at the intersection of Liaoning, Hebei and Inner Mongolia, is a traffic artery connecting Northeast China and North China, and connecting Eastern Inner Mongolia and coastal ports. Its unique geographical location makes the company have certain advantages in market radiation. At the same time, the product structure dominated by building materials can also form a differentiated competitive advantage in the region." China integrity International said in its recent follow-up rating report on Linggang shares and bonds.
The report points out that as the only local state-owned steel enterprise in western Liaoning, the government and its controlling shareholders can provide some support for Linggang in terms of resource security.
Linggang group, as the controlling shareholder of Linggang shares and located in Lingyuan City, was founded in 1966. It is a large state-owned enterprise group with steel as its main industry and the coordinated development of tire chemical industry, machinery, new materials, new energy, mining, finance and other diversified industries.
According to the information of wind Global Enterprise Library, Linggang group produced 5.9 million tons of steel in 2019, with a revenue of 20.6 billion yuan and a profit and tax of 1.53 billion yuan. It is one of the top 500 manufacturing enterprises in China. The actual controller of Linggang group is Chaoyang state owned assets supervision and Administration Commission, which holds 90% of its shares, and the other 10% of its shares are held by Liaoning Provincial Department of finance.
The other party of this restructuring is Angang Group, a central enterprise. Its main business involves steel, iron, vanadium, titanium and other fields. It owns three listed companies, Angang Steel, Pangang vanadium titanium and Benxi steel plate.
According to the information on the official website of Angang Group, it is one of the world's top 500 enterprises, with nine production bases in China, and has the production capacity of 53.3 million tons of iron, 63 million tons of steel, 40000 tons of vanadium products and 500000 tons of titanium products. At the same time, the company effectively controls the iron ore, vanadium and titanium resources located in Liaoning, Sichuan and kalala, Australia, with an annual output of 50million tons of iron concentrate. It is the world's largest vanadium production enterprise and the largest titanium raw material production base in China.
Wind data shows that in 2021, Angang Group achieved a revenue of 383.1 billion yuan and a net profit of 11.1 billion yuan; By the end of 2021, the total assets were 491.9 billion yuan, the total liabilities were 340.9 billion yuan, and the debt ratio was 69%. Among its main businesses, 76% came from steel related businesses, 12% from trade businesses, and the remaining 12% came from vanadium, titanium and other businesses.
For the reason of this reorganization, the above-mentioned Linggang related person told reporters that the actual controller of Linggang is the state owned assets supervision and Administration Commission of Chaoyang City, Liaoning Province, so the reorganization is currently negotiated by the Chaoyang municipal government with Angang Group, and Linggang and Linggang group are not involved, so they do not understand it.
As for the impact on the company after the reorganization, the person said that the specific situation after the reorganization depends on how Angang Group arranges. "However, on the whole, it should be a good thing to have a strong controlling shareholder for the development of Linggang."
As the bond rating agency of Linggang, China integrity international also expressed concern about the restructuring. In its credit rating announcement on June 24, it said that the strategic restructuring of Linggang's controlling shareholders will not have a significant impact on Linggang's normal production and operation activities for the time being. At the same time, considering the important position of Angang Group in the development of the national steel industry and its strong resource coordination ability, Linggang's ability to obtain external support from shareholders is expected to be strengthened after the completion of the above strategic restructuring.
In addition, the above restructuring announcement shows that this restructuring is still in the planning stage, there is uncertainty, and the plan needs to be approved by the relevant departments after it is determined.
Born of reorganization
In fact, the current Anshan Iron and steel group emerged from a reorganization more than 10 years ago.
According to public information, Angang Steel Group was established in July, 2010. It is the parent company established after asset restructuring by Anshan Iron and Steel Group Co., Ltd. (hereinafter referred to as "Anshan Iron and steel") and Panzhihua Iron and Steel Group Co., Ltd. (hereinafter referred to as "Panzhihua Iron and steel group") according to the requirements of the state owned assets supervision and Administration Commission.
For the impact of this restructuring on Pangang Group, Pangang vanadium titanium (a listed company of Pangang Group) told reporters: "Before the reorganization with Anshan Iron and steel in 2010, Pangang vanadium and titanium was listed as a whole, so the main business assets of Pangang Group were in the vanadium and titanium system of the listed company Pangang. During the reorganization process, because Anshan Iron and steel owned Angang shares, a listed company with main iron and steel business, in order to avoid horizontal competition, Pangang vanadium and titanium steel business was replaced with Anshan Iron and Steel's mining business."
The person further explained that after 2013, the international iron ore price fell sharply, causing Pangang vanadium titanium to lose money for three consecutive years from 2013 to 2015. In order to keep the listed company, Pangang vanadium and titanium sold assets in 2016, selling iron ore mining, titanium concentrate purification business and assets and sponge titanium project assets to the controlling shareholder Pangang Group and Angang mining group, which is owned by Angang Group. After the asset sale, vanadium and titanium became the main businesses of vanadium and titanium in Pangang.
In addition, Anshan Iron and Steel Group also successfully restructured Benxi Iron and Steel Group in Liaoning Province in 2021, becoming the second largest iron and Steel Group in China after China Baowu iron and Steel Group Co., Ltd. (hereinafter referred to as "China Baowu").
In October 2021, according to the relevant signed agreement, the state owned assets supervision and Administration Commission of Liaoning Province transferred its 51% equity of Benxi Iron and Steel Group to Anshan Iron and Steel Group free of charge, and Anshan Iron and Steel Group became the controlling shareholder of Benxi Iron and steel group.
"The restructuring of Anshan Iron and Steel Co., Ltd. is a comprehensive reform of 'six measures at the same time', including the equity diversification reform at the level of Anshan Iron and Steel Group, the free transfer of 51% equity of Benxi Iron and Steel Co., Ltd., the debt to equity swap of Benxi Iron and Steel Co., Ltd., the mixed reform of Benxi Iron and Steel Co., Ltd., the integration and integration of Anshan Iron and Steel Co., Ltd. and the market-oriented reform of Ben Ji Yan, general counsel of Anshan Iron and Steel Group and head of Anshan Benxi integration and integration promotion working group, recently told media reporters.
The above tracking rating report of zhongchengxin international bonds pointed out that in October 2021, Angang Steel Group completed the restructuring of Benxi Steel Group and became the controlling shareholder of Benxi Steel Group. While improving the industrial concentration, it further enhanced the competitiveness of enterprises through regional capacity integration.
Wind data shows that Angang Group currently holds 100% of the shares of Anshan Iron and Steel Group and Panzhihua Iron and Steel Group, and the latter two are wholly-owned subsidiaries of the former; Angang Steel Group holds 48.45% of the shares of Benxi Steel Group and is its controlling shareholder.
Increased concentration
"In recent years, the macro level has been improving the concentration of the steel industry." The above Linggang stock person told reporters.
Since 2021, the supply side structural reform of the iron and steel industry has continued. Focusing on the goals of "double carbon", many departments have required to reduce crude steel output, and many places have also issued production restriction notices.
In April, the national development and Reform Commission and the Ministry of industry and information technology proposed to organize and carry out nationwide crude steel production reduction. On the basis of the results of capacity reduction, we should focus on reducing the crude steel production of enterprises with poor environmental protection performance, high energy consumption and relatively backward process equipment, so as to ensure that the national crude steel production in 2021 fell year-on-year.
However, due to the global economic recovery and the strong demand for steel at home and abroad, the domestic crude steel production still showed a continuous growth trend in the first half of 2021. In the current period, China's cumulative crude steel output was 563 million tons, with a year-on-year increase of 11.80%, a record high in the same period.
Therefore, since July of that year, more stringent crude steel reduction policies have been introduced. Among them, Tangshan has implemented a 30% production restriction policy since July, requiring the city's crude steel output to be reduced by 12.37 million tons year-on-year in 2021; Shandong Province issued a notice requiring that the annual crude steel output should not exceed 76.5 million tons; Jiangsu, Jiangxi, Hubei, Shanxi and other provinces also require steel enterprises to ensure that the crude steel output will not increase year-on-year.
Under the production restriction policy, the annual output of pig iron, crude steel and steel in 2021 was 869 million tons, 1.033 billion tons and 1.337 billion tons respectively, with a year-on-year decrease of 4.3%, 3% and an increase of 0.6% respectively. The pressure drop of crude steel output has been achieved for the first time in the past six years.
While resolving overcapacity and maintaining steel profit margins by curbing the growth of crude steel production, large steel enterprises represented by China Baowu and Anshan Iron and Steel Group also continued to promote mergers and acquisitions in the industry.
In February, 2021, China Baowu trusteeship Kunming Iron and steel Holding Co., Ltd; In April, China Baowu signed a professional integration entrusted management agreement with Chongqing Iron and steel (Group) Co., Ltd., and entered the substantive operation stage; In July, China Baowu officially announced the strategic restructuring of Shandong Iron and Steel Group Co., Ltd. planned with the state owned assets supervision and Administration Commission of Shandong Province.
"In the future, with the improvement and promotion of relevant merger and reorganization policies, the process of improving the concentration of the steel industry may be accelerated." Zhongchengxin International believes that the restructuring of saddle and the steady progress of a series of integration of China Baowu have continuously increased the concentration of the steel industry. In addition, some steel enterprises also have their own mining resources, and the voice and anti risk ability of iron ore procurement and cross-border settlement may be improved.
According to the report of China integrity international, in 2021, China's key medium and large-scale iron and steel enterprises achieved a sales revenue of 6.93 trillion yuan and a total profit of 352.4 billion yuan, with a year-on-year increase of 32.7% and 59.7% respectively, hitting a record high. In 2022, controlling output is still the main means for China's steel industry to achieve "carbon peak". At the same time, downstream demand will maintain a certain level, and steel enterprises can still maintain a certain profit margin, but we need to pay attention to the impact of rising raw fuel costs.