Tangshan Steel to gain more assets from parent
Hebei Iron & Steel Group, the mainland's second-largest producer, is accelerating the injection of assets into listed flagship Tangshan Iron & Steel in a move that could make it the country's biggest publicly traded steelmaker.
Hebei Steel will inject Xuanhua Iron & Steel and Wuyang Iron & Steel into Shenzhen-listed Tangshan Steel within a year of the completion of a restructuring plan to consolidate all its listed units. That contrasts with an earlier timetable of three years.
Xuanhua Steel, which produces construction rebar and steel wire, produced 5.2 million tonnes of steel products last year. Wuyang Steel, a maker of steel plates used in shipbuilding and bridges, had an output of 2.48 million tonnes last year.
Hebei Steel has a 100 per cent stake in Xuanhua Steel, which has a registered capital of 1.8 billion yuan (HK$2.04 billion), and a 61.17 per cent holding in Wuyang Steel, which has a registered capital of 2.33 billion yuan.
The statement about the asset injections comes a week before shareholders of Tangshan Steel, Shanghai-listed Handan Iron & Steel and Chengde Xinxin Vanadium and Titanium vote on a plan to merge the three sister companies into one through a share swap.
According to the plan, announced in late December, one Handan Steel share will be swapped for 0.775 Tangshan Steel share, while one Chengde Xinxin share will be exchanged for 1.089 Tangshan Steel shares. Minority shareholders of the three firms are due to vote on the deal next Friday.
After the merger, Tangshan Steel will remain the only listed arm of Hebei Steel, while the other two will be delisted. The combined steel production of the group was 19.39 million tonnes last year, with a turnover of 113.26 billion yuan.
Hebei Steel's shareholding in the expanded Tangshan Steel will be reduced to 46.83 per cent from 53.88 per cent.
Analysts said that after the injection of Xuanhua Steel and Wuyang Steel, the expanded Tangshan Steel would have an annual output of 27 million tonnes, based on last year's production, larger than the 24.93 million tonnes for this year planned by the biggest listed steelmaker, Baoshan Iron & Steel.
Hebei Steel, which was formed in June last year under a government-directed merger between Tangshan Iron & Steel Group and Handan Iron & Steel Group, would inject the rest of its steel assets into Tangshan Steel in three years, the statement said.
'It makes sense for Hebei Steel to inject Wuyang Steel and Xuanhua Steel first, as their profitability is better,' an analyst said.
Assets that remain in the hands of Hebei Steel also include Hanbao Iron & Steel, which posted a 365 million yuan loss last year, and a 49 per cent stake in the Shougang Jingtang Caofeidian project. The 9 million tonne-a-year Caofeidian project started its trial operation last month.
Shares of the three listed firms rose yesterday. Tangshan Steel rose 0.68 per cent to 7.43 yuan, Handan Steel gained 1.34 per cent to close at 5.29 yuan and Chengde Xinxin rose 0.96 per cent to 8.41 yuan.
Top spot
Tangshan Steel will become the mainland's No1 listed steelmaker
The annual output of Tangshan Steel after the asset injections, in tonnes: 27m
