On July 29, 2024, Shougang Cent (0103.HK) announced that the company's shareholders Fair Union and Qintai Management transferred 87.516 million shares and 8.446 million shares respectively to Redamancy.Z Holdings Limited at a price of HKD0.863 per share. At a closing price of HKD0.24 on July 29th, the transfer price was as high as 259% premium. The company stated that the introduction of strategic shareholders will help diversify the company's shareholder structure, enhance business synergy, and promote business development.
It is understood that Fair Union is a wholly-owned subsidiary of Shougang Hong Kong, currently holding 45.67% of Shougang Cent's shares. After the completion of the share transfer, the holding ratio will be reduced to about 41.2%. Shougang Hong Kong stated that it will continue to be bullish about the company's development prospects.
It is worth noting that the company's audited net asset value per share in 2023 was approximately HKD0.86, and the transfer price precisely reflects the company's net asset value.
Shougang Cent is mainly engaged in the manufacturing and sale of steel cord. It seizes the market opportunities of the rapidly growing automotive and tire markets and the market opportunities of the increased production of new energy vehicles under the national energy conservation and emission reduction targets. During the three years of the epidemic, the company has maintained steady growth in revenue and profits against the trend. After the opening of the country's door in 2023, it quickly seized the opportunity of economic recovery, continuously improved its refined operation, and enhanced its production capacity. According to public information, it achieved a high-speed growth of 30.61% in net income and an increase of 54.97% in earnings per share in the 2023 fiscal year. Along with the company's revenue growth, the company's feedback from shareholders was strong, and the dividend payout ratio increased year by year, with the dividend payout ratio stable at around 30% in the past three years. Among them, the dividend payout ratio in 2023 was 31.55%, which almost doubled compared to 17% in 2019. At the same time, while consolidating its domestic business, the company also actively explores overseas markets. Currently, the company's brand has gained a good reputation overseas. Along with the continuous expansion of overseas markets, the proportion of the company's export sales has significantly increased year by year, according to public information, rising from 20.7% in 2019 to 36% in 2023, reflecting the significant effectiveness of the company's "going global" strategy. The continuous exploration of new markets has helped the company to continue to expand its market share, consolidate its main business advantages, and improve its performance. The introduction of strategic shareholders this time is the embodiment of the company's "strong alliance" strategic thinking, and it is expected to further assist the company in developing richer industry resources and accelerate the pace of entering overseas markets.
It is reported that the strategic shareholders introduced this time are senior figures in the industry who have been working in the steel cord industry for nearly 10 years, and have served as international sales directors for industry leading companies, with rich experience and customer relations in the international market. It is expected that joining Shougang Cent as a strategic shareholder will help the company to quickly start the construction of overseas production bases and assist the company in expanding international business. The company's goal is to achieve a sales ratio of more than 50% from overseas customers in the future, while establishing a complete global sales, logistics, and service network. The management stated that in the future, the company will make full use of the window period for industry consolidation and seek strategic cooperation goals for overseas production capacity while firming up its main business. Based on its existing advantages, it will explore the forward-looking development of domestic and international markets in the field of wire and cable.
The management expressed that the strategic partnership aligns with the company's long-term business plans and is expected to create a synergistic effect between the parties. The company will leverage its strong supply chain integration capabilities, technology R&D capabilities, and excellent quality control capabilities to establish a win-win partnership model with strategic shareholders and lay a solid foundation for future growth.