Guangzhou Shipyard International (317.HK) Embraces New Opportunities as Parent CSSC Boosts Assets Securitization

Tuesday, 13 January 2015, 09:30 HKT/SGT

Rare Exchange-level forum points to asset securitization ambitions of China's defense industry giants under new reform initiative

HONG KONG, Jan 13, 2015 - (ACN Newswire) - On 30 December 2014, Shanghai Stock Exchange jointly held "Summit On Defense Industry Development and Capital Market" with China's defense industry giants, including China State Shipbuilding Corporation (CSSC). Among a broad range of topics on military-civilian industry integration and capital market initiatives, participants focused on asset securitization strategies of military enterprises as an effective vehicle for the reform in mixed ownership system, the new government initiative that is expected to bring a second SOE revolution. SHEX and regulatory representatives called at the summit more proactive innovations by means of share issuances, and M&As in support of the overall restructuring and development of the country's military industry.

Guangzhou Shipyard International (317.HK) Embraces New Opportunities as Parent CSSC Boosts Assets Securitization

A focal point of discussion at the Summit was the injection of core military industry assets into Guangzhou Shipyard International as a landmark deal in creating the defense-capital link. Mr. Hu Wenming, Chairman of of CSSC, the parent company of GSI, expressed that military enterprise will proactively embrace the capital market to take full advantage of the listed company as the public and open platform to implement the mixed-ownership reform for military SOEs for a safest and most sufficient mix, which could not only preserve and increase the assets value and introduce diversified capital to drive the development of military industry of China, but also realize the joint development and win-win of such social capital and the state-owned capital, and there are huge potential for the securitization of China's shipbuilding assets, and CSSC will actively drive its subordinate enterprises to take full use of the capital market to integrate their advantages, so as to realize their development goals. Meanwhile, Mr. Han Guangde, the Chairman of Guangzhou Shipyard International delivered a keynote speech at the symposium to share and discuss the development path for military enterprises against the new backdrop of the Shanghai-Hong Kong Stock Connect.

In line with the state strategy, CSSC will drive assets securitization through leveraging the capital market, which is expected to bring Guangzhou Shipyard International a leapfrog development

From the perspective of state strategy, the new situation of the "Belt and Road" initiatives proposed by the new government posed greatly higher requirements on the whole national defense industry and the military-civil mix. Nowadays, the reform of national defense industry is in its full swing, which also poses higher requirements on the whole military industry. As far as the shipbuilding industry is concerned, the requirements have gone beyond the pure fabrication and assembly and it is however required to provide the navy more systematic equipments with stronger combat ability. Therefore, in this regard, the military equipment reform also poses fresh requirements on relevant enterprises such as CSSC and Guangzhou Shipyard International. In addition, the fact that China has extensive sea frontier suffering continued disputes with surrounding countries with as high as 60% of its crude oil relying on import and 80% of its import of resources being transported by sea, poses great challenges to the development, energy safety and national defense of China, which represent both higher challenges and more opportunities as far as the Chinese military shipbuilding enterprises are concerned.

In line with the assets securitization initiative of the state towards the military industry, CSSC is proactively promoting the asset securitization by leveraging the capital market. As an ultra large state-owned enterprise of China, CSSC operates six major business sectors in total with a relatively low assets securitization rate of only 30%. However, there has been a long history since the companies controlled by CSSC were listed. The future development of Guangzhou Shipyard International, as one of the first nine A+H listed companies of China, will be of great help to CSSC for its financing and consolidation of strategic resources. In fact, as the sole international listing platform of CSSC, the market expects GSI to serve as the core platform in the new round of capital integration of CSSC as the latter pushes forward its asset securitization strategy among its members..

Topic: Press release summary Sectors: Daily Finance, Daily News
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