China Energy Construction To Realize A + H Dual Listing

On April 20, China Gezhouba Group Co., Ltd. (600068. Sh, hereinafter referred to as Gezhouba) announced in the Shanghai stock exchange that China Energy Construction Co., Ltd. (03996. HK, hereinafter referred to as China energy construction) intends to absorb and merge Gezhouba by exchanging shares to shareholders other than Gezhouba Group.

After the merger, Gezhouba will terminate its listing. As a surviving company, China energy construction will take over all assets, liabilities and other rights and obligations of Gezhouba Group, and Gezhouba will eventually cancel its legal personality.

After this transaction, China energy construction will realize A-share and H-share listing.

A premium of 45% will be used for stock exchange

According to the announcement, the share exchange price of Gezhouba is 8.76 yuan / share, with an average price of 6.04 yuan / share in the 20 trading days before the pricing benchmark date, and China energy construction will give 45% premium rate to Gezhouba shareholders for risk compensation. The A-share offering price of China energy construction is 1.98 yuan / share.

Based on this calculation, the conversion ratio of Gezhouba to Gezhouba is 1: 4.4242, which means that each Gezhouba share held by Gezhouba shareholders can be exchanged for 4.4242 A shares issued by China energy construction.

As of the pricing benchmark date, the total shares of Gezhouba are about 4.605 billion shares. In addition to the shares held by Gezhouba Group, a total of 2.632 billion shares of Gezhouba participated in the share exchange. Based on this calculation, China Energy Construction Co., Ltd. issued a total of 11.646 billion shares.

After the transaction, China energy construction group accounts for 45.08% of the total equity of China energy construction group, which is still the controlling shareholder of the latter; the state owned assets supervision and Administration Commission of the State Council holds 90% of the equity of China energy construction group and is still the actual controller of China Energy construction. After the completion of the merger, the actual controller will not change, and the merger by share exchange will not constitute restructuring and listing.

Hundreds of billion giants unite

According to the public information, China energy construction is a listed company under China energy construction group, mainly engaged in construction contract business, and its main business covers energy and power, water conservancy and water affairs, railway and highway, etc.; Gezhouba Group is the direct controlling shareholder of Gezhouba, and its business covers construction, environmental protection, real estate, cement, etc.

China Energy Construction Group is composed of China Gezhouba Group Co., Ltd., China Electric Power Engineering Consulting Group Co., Ltd. and other 15 provinces (districts, cities) of Electric Power Survey and design, construction and maintenance enterprises. It has completed more than 90% of China's electric power planning and scientific research, consulting and evaluation, survey and design, and industry standard formulation. More than 90% of the UHV transmission and transformation project design tasks in China have been completed Completed by China energy construction group.

In September 2014, China energy construction group and its wholly-owned subsidiary Electric Power Planning Institute Co., Ltd. jointly initiated the establishment of energy China; in December 2015, China energy construction was listed on the Hong Kong stock exchange.

As the main force of the project construction, China energy construction has successively participated in the construction of the Three Gorges project, the South-to-North Water Diversion Project, the west to east gas transmission project, the west to East power transmission project, and the third generation nuclear power generation project, and has undertaken a large number of major projects, such as the world's first AP1000, cap1400 nuclear power project, the world's largest wind and solar energy storage and transmission project, and the world's highest altitude power transmission and transformation project.

According to the financial report information, in 2020, China energy construction realized a revenue of 270.328 billion yuan, a year-on-year increase of 9.32%; the net profit attributable to shareholders of the company was 4.680 billion yuan, a year-on-year decrease of 7.84%.

As of the end of 2020, the total assets of Gezhouba reached 259.4 billion yuan, with a revenue of 112.611 billion yuan last year, a year-on-year increase of 2.42%; the net profit attributable to shareholders of listed companies was 4.282 billion yuan, a year-on-year decrease of 21.31%.

As of the end of April 20, China nengjian's share price was HK $0.79/share, with a total market value of HK $23.72 billion; Gezhouba's share price was at RMB 7.33/share, with a total market value of RMB 33.75 billion.

Realize resource integration and eliminate competition in the same industry

This is also the first time that a listed company of a state-owned enterprise has made substantial progress in absorbing and restructuring after three years of state-owned enterprise reform.

From the middle of October 2020, China energy construction and Gezhouba successively issued announcements to disclose the merger plans of the two sides, and determined the merger plan; in February 2021, China energy construction and Gezhouba announced that the merger plan of the two sides was agreed in principle by the state owned assets supervision and Administration Commission of the State Council.

Gezhouba said in this announcement that China energy construction and Gezhouba will achieve comprehensive integration of resources, eliminate potential horizontal competition, and fully release business synergy effect; after the merger, the comprehensive service ability of the surviving companies will be further improved, and China energy construction and Gezhouba will further strengthen the core through the deep integration of assets, personnel, brand, management and other elements Competitiveness and industry influence.

At present, the merger plan has been examined and approved by the board of directors of China energy construction and Gezhouba, and also needs the approval of the general meeting of shareholders of Gezhouba, the general meeting of shareholders of China Energy Construction Corporation and the China Securities Regulatory Commission.

In October 2020, the State Council issued the opinions on further improving the quality of listed companies (hereinafter referred to as the opinions). The document pointed out that in recent years, the number of domestic listed companies has increased significantly and the quality has continued to improve. However, the problems of non-standard operation and governance and low development quality of listed companies are still prominent, which meets the requirements of building a modern economic system and promoting high-quality economic development There is still a gap.

The opinions put forward to promote market-oriented M & A, give full play to the role of capital market as the main channel of M & A, and encourage listed companies to revitalize stock, improve quality and efficiency, and transform and develop.

During the 14th Five Year Plan period, the overall development goal of China Energy Construction Corporation is to cultivate the first-class engineering company with global competitiveness on the basis of building an engineering company with international competitiveness in an all-round way; by 2035, China energy construction will become a world-class engineering company with global competitiveness.

A financial industry professional pointed out to the 21st century economic report reporter that in recent years, the merger and reorganization of large companies are mostly to eliminate peer competition and form a good synergy effect. The absorption and merger of China nengjian and Gezhouba is conducive to transforming the previous competitive relationship to a certain extent into a comprehensive cooperative relationship, which is conducive to improving the resource allocation efficiency of both sides.

"After absorbing Gezhouba assets, China energy construction can further promote its expansion in cement and building materials, real estate investment, civil blasting and other fields, which will further enhance its international competitiveness, and its market value will have higher growth space." According to the financial people.