In order to speed up the transformation of "chasing light", East China Heavy Machinery will divest its CNC machine tool business with poor performance, further improve its business structure planning and optimize its future strategic layout.
According to the announcement of East China Heavy Machinery on October 19, 100% equity of Guangdong Runxing Technology Co., Ltd. (Hereinafter referred to as "Runxing Technology"), a wholly-owned subsidiary, was publicly listed and transferred for the third time on the Shenzhen United Property Exchange, and the listing price was reduced to 700 million yuan. Guangdong yuanyuan Technology Co., Ltd. (Hereinafter referred to as "yuanyuan Technology") controlled by Zhou Wenyuan, the largest shareholder of East China Heavy Machinery, will transfer the above assets at a transaction consideration of 700 million yuan
if the intended transferee is still not collected during the listing period.
In recent years, affected by the industry cycle and other factors, the scale of CNC machine tool business with Runxing Science and Technology as the main body has declined. If it can be sold smoothly, the industry believes that it will help East China Heavy Machinery to improve its financial situation and performance indicators, while increasing the company's working capital reserves, so as to focus on resources and achieve business transformation and long-term sustainable development of the company.
If no one signs up, the original controller will buy back
700 million yuan on October 19. East China Heavy Machinery disclosed that the board of directors of the company agreed to transfer 100% of the shares of Runxing Science and Technology, a wholly-owned subsidiary, to the Shenzhen United Property Exchange for the third public listing, and lowered the listing price to 700 million yuan. The starting and ending date of the listing is expected to be from October 20 to November 2.
As Runxing Technology accounts for 52.41% of the total assets of listed companies, according to relevant regulations, this transaction constitutes a major asset reorganization.
At the same time, on October 19, with the consent of the board of directors, East China Heavy Machinery signed the Agreement on Equity Transfer of Guangdong Runxing Technology Co., Ltd. with the effective conditions with more than 5% shareholders Zhou Wenyuan and Guangdong yuanyuan controlled by Zhou Wenyuan. The agreement stipulates that if East China Heavy Machinery fails to collect the intended transferee during the public listing period, Guangdong yuanyuan controlled by Zhou Wenyuan will transfer the underlying assets at a transaction consideration of 700 million yuan.
According to the Assets Appraisal Report issued by the Sino-Swiss World Federation, taking June 30, 2023 as the base date of appraisal, the appraisal value of all shareholders'rights and interests of Runxing Science and Technology is 937 million yuan.
Regarding the determination of the transaction plan and price, East China Heavy Machinery said that considering the intention of Guangdong yuanyuan controlled by Zhou Wenyuan to acquire the underlying assets for 700 million yuan, the company adjusted the third listing price to 700 million yuan in combination with the second listing situation and the net assets amount of Runxing Science and Technology as of the evaluation benchmark date. In terms of
payment method, if the counterparty is Guangdong yuanyuan controlled by Zhou Wenyuan, Guangdong yuanyuan will pay all the consideration of this transaction in cash.
Zhou Wenyuan is also the original controller of Runxing Technology. Six years ago, East China Heavy Machinery spent nearly 3 billion yuan to buy Runxing Technology from shareholders including Zhou Wenyuan. According to
public information, Runxing Technology is mainly engaged in research and development, manufacturing, sales and service of high-end intelligent equipment, including high-end CNC machine tools, industrial robots and automation turnkey projects.
According to the announcement, in April 2017, East China Heavy Machinery disclosed that it planned to purchase 100.00% of Runxing Technologies from Zhou Wenyuan (51%), Wang He, Huang Shiling and Huang Conglin by issuing shares and paying cash, with a transaction consideration of 2.95 billion yuan and a value-added rate of 624.98%.
The divestiture of "lagging" assets is expected to enhance profitability
. East China Heavy Machinery is mainly engaged in high-end equipment manufacturing business, mainly container handling equipment and intelligent CNC machine tools. Among them, the company's CNC machine tool business is a new business segment through the acquisition of Runxing Technology in 2017, which is currently mainly carried out through Runxing Technology. The main products belong to the metal cutting machine tool industry in the machine tool industry, focusing on the application in the field of consumer electronics processing.
In recent years, due to the downturn of the downstream consumer electronics industry and the tension of the global supply chain, the consumer electronics OEM business of Runxing Technology's direct downstream customer groups has shrunk. On the one hand, the insufficient demand for capacity investment of this part of the customer groups has dragged down the new sales of machine tools and equipment. On the other hand, the business repayment of stock customers is also adversely affected. Since
2020, the operation of Runxing Science and Technology has been poor, with continuous losses and no obvious signs of improvement in income and net profit indicators. It also affects the performance of listed companies because of the large amount of goodwill impairment calculated by Runxing Science and Technology.
Observing another container handling equipment business of the company, the main products include quayside bridge, rail crane, tire crane, etc. In 2021, 2022 and the first half of 2023, the revenue scale of the equipment business is 242 million yuan, 1.001 billion yuan and 261 million yuan, respectively. The gross profit margin was 5.42%, 6.38% and 23.82% respectively. In recent years, the revenue scale of container handling equipment business has increased rapidly year-on-year, and the gross profit margin has improved since 2022.
It is reported that the company's container handling equipment business revenue growth is mainly due to the overall domestic economic recovery to promote the recovery of the port machinery market, as well as the smooth progress of the overseas key customer Singapore Port Group (PSA) project, the completion of project acceptance and delivery.
Through this transaction, the listed company will divest the intelligent CNC machine tool business with poor profitability, focusing on container handling equipment and photovoltaic module business. The listed company will withdraw part of the funds through this asset sale, which is conducive to enhancing the ability of sustainable operation and promoting the transformation and upgrading of business structure. It is expected to have a positive impact on the future profitability of listed companies and safeguard the interests of minority shareholders.
Huadong Heavy Machinery also mentioned in the announcement that the company intends to seize the growth opportunities of the photovoltaic module market, further promote the transformation and upgrading of the company's business, and enhance the company's competitiveness and operational capacity. To achieve business transformation. Since
2023, East China Heavy Machinery has introduced a management team with photovoltaic industry background, and has successively invested in the high-efficiency solar cell project in Peixian County, Xuzhou, Jiangsu Province, and signed a contract for the high-efficiency solar cell production base project in Bozhou, Anhui Province. In March 2023, the
company signed the Investment Contract with the Management Committee of Jiangsu Peixian Economic Development Zone, intending to invest in the construction of "10GW High-efficiency Solar Cell Production Base Project" in Jiangsu Peixian Economic Development Zone, and set up a subsidiary company in April 2023. In August 2023, the first phase of the project was put into operation.
From the effective date of the contract, it took only 115 days to realize the first photovoltaic cell offline, which is almost the fastest record of the strategic transformation of listed companies in the photovoltaic industry .
At the same time, in July 2023, the company signed the Investment Contract with the Management Committee of Wuhu Modern Industrial Park in Bozhou, Anhui Province, and the company intends to invest in the construction of "10GWN-type high-efficiency solar cell production base project per year" in Wuhu Modern Industrial Park in Bozhou. In August 2023, a subsidiary company was set up to complete the project.
For the two projects in Peixian and Bozhou, Huadong Heavy Machinery has high expectations on the income assessment. It is estimated that after the two projects are put into operation, the annual invoicing income will not be less than 10 billion yuan, and the annual tax payment will not be less than 200 million yuan.
For capacity planning, East China Heavy Machinery said in its semi-annual report that it plans to build 30GWN-type high-efficiency photovoltaic cell capacity by 2024 and 50GWN-type high-efficiency photovoltaic cell capacity by 2025.
East China Heavy Machinery believes that by expanding the production business of photovoltaic modules to achieve business structure optimization and transformation and upgrading, in addition to the company's own operating cash flow, the sale of the underlying assets can further increase the company's capital reserves to meet the overall capital needs brought about by the transformation of business structure.
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