Following the announcement of planning asset replacement in September last year, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) (601669) and the controlling shareholder power construction group will enter a substantive stage of asset replacement.
On January 6, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) announced that it was planned to replace the real estate assets held by the company with the high-quality power grid auxiliary assets held by the company’s controlling shareholder power construction group, the assets placed were the equity of 18 subsidiaries held by power construction group, and the assets placed were the equity of 3 subsidiaries held by the company. The assessed value of the owner’s equity of the assets put in is 24.653 billion yuan, and the owner’s equity of the assets put out is 24.718 billion yuan. The difference is made up in cash.
The funds in the secondary market were prescient. On January 6, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) ushered in the long-standing trading limit for more than two months, and the trading volume was also enlarged, closing at 8.36 yuan, an increase of 10%, with more than 178000 orders.
put in assets of 24.653 billion yuan
Specifically, the announcement shows that in order to properly solve the horizontal competition between the power construction group and the company, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) plans to replace the assets with the power construction group, and the company will replace the real estate assets held by the company with the high-quality power grid auxiliary assets held by the power construction group.
From the perspective of counterparties, PowerChina group is the controlling shareholder of the listed company, with a shareholding ratio of 58.34%, and the actual controller is the SASAC of the State Council. The assets placed in this transaction are 18 companies such as Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) group Huazhong electric power design and Research Institute Co., Ltd., Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) Group Hebei Electric Power Survey, design and Research Institute Co., Ltd., Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) group Nuclear Power Engineering Co., Ltd. held by power construction group.
As of December 31, 2020, the audited total assets and net assets of PowerChina group were 1056.98 billion yuan and 271.228 billion yuan respectively, and the audited total operating revenue and net profit in 2020 were 541.558 billion yuan and 13.9 billion yuan respectively.
The assets purchased are 100% equity of Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) Real Estate Group Co., Ltd., 100% equity of Beijing Feiyue Lingkong Technology Industry Development Co., Ltd. and 100% equity of Tianjin Haifu Real Estate Development Co., Ltd.
Referring to this asset replacement, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) said that the controlling shareholders will inject high-quality assets in horizontal competition with the company into the company, which will help reduce the horizontal competition between the company and the controlling shareholders and enhance the independence of the company. At the same time, the placement of 18 high-quality power grid auxiliary assets under the power construction group is conducive to further optimizing the company’s assets and improving the company’s industrial structure. The overall profitability of the placed assets is higher than that of the placed assets, which is conducive to thickening the company’s return on net assets and earnings per share, and improving the company’s profitability and asset quality.
securities companies are generally optimistic about
In fact, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) this plan has been put into the relevant business of the controlling shareholder power grid auxiliary enterprises for a long time.
In 2011, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) was listed on the Shanghai Stock Exchange, The company wrote in the prospectus: “at Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) After the establishment of the group, it will improve the corporate governance structure, coordinate business development and realize the overall listing when conditions are met. In the specific implementation, it is proposed to take the issuer as the capital operation platform, inject the survey, design, supervision and consulting business of hydropower, wind power and other new energy into the listed company first, and then inject the relevant business of power grid auxiliary enterprises into the listed company “.
On September 28, 2021, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) issued the announcement of planning asset replacement, which means that the asset replacement action will be accelerated.
At that time, it was announced that in August 2014, the power construction group issued the statement on business injection commitments related to power grid auxiliary enterprises to the company, and the injection work has been started for the survey, design, supervision and consulting business of new energy such as hydropower and wind power. It also promises that within 8 years from the date of announcement, it will be injected into the company after the company performs the corresponding procedures of the board of directors or the general meeting of shareholders in accordance with applicable laws and regulations and the articles of association.
On December 22, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) issued another announcement on the progress of planning asset replacement. In order to successfully implement the asset replacement transaction, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) plans to implement debt to equity swap for Tianjin Haifu Real Estate Development Co., Ltd., a wholly-owned subsidiary. The amount of debt to equity swap is 16.3 billion yuan. After the implementation of debt to equity swap, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) still holds 100% equity of Tianjin Haifu.
It is worth noting that the asset replacement action between Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) and the controlling shareholder is also generally favored by securities companies.
According to the Research Report of Tianfeng Securities Co.Ltd(601162) , if the asset replacement is completed, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) will no longer involve the real estate development business. The company’s subsequent refinancing restrictions may be greatly alleviated and the financing flexibility will be greatly improved. The medium and long-term development plan of pumped storage has been implemented, and the construction of pumped storage may be accelerated. As the core main force of China’s pumped storage construction, the growth prospect of the company’s engineering construction business is good during the “14th five year plan”.
On the other hand, during the “14th five year plan” period, the company has a vigorous planning for the layout of new energy power assets, and the scale of scenery operation may continue to grow rapidly (it is expected to add 30GW + at the end of the 14th five year plan and 6.6gw at the end of vs20fy). “The prospect of the company’s transformation and upgrading is worth looking forward to, but the rapid growth of engineering construction business and the vigorous layout of power assets require more financial support, the expansion of financing channels or the acceleration of the company’s transformation and upgrading.”
China Merchants Securities Co.Ltd(600999) believes that considering that the company will increase investment in clean energy operation, this asset replacement is expected to release refinancing and support the development of relevant businesses. At present, the company has entered the stable leverage stage, and its future performance is expected to grow rapidly. In view of the company’s advantages in clean energy engineering and the company’s strong investment in clean energy operation, we believe that the company’s valuation should be significantly improved by the dual support of Engineering competitiveness and high-quality assets. At the same time, the pumped storage construction will further thicken the company’s performance.
(Securities Times · e company)
