Caifin News on October 20th (Reporter: Liu Yue) Recently, under policy support, the activity in the mergers and acquisitions market has further increased, with constant major reorganizations in SOEs. On Friday evening, SPIC Industry-Finance Holdings under State Power Investment Corporation (000958.SZ) and Spic Yuanda Environmental-protection (600292.SH) revealed the reorganization plan, which will respectively involve nuclear energy assets and hydropower assets, ultimately being developed as the core nuclear power operation asset integration platform of State Power Investment Corporation and the domestic hydropower asset integration platform. The stocks of these two companies will resume trading on October 21st (Monday).

In September, 'China CSSC' and 'China CECEP' have triggered a wave of massive state-owned enterprise reorganizations in the A-share market, with the former planning to merge with China Shipbuilding Industry and the latter intending to take over Qinghai Salt Lake Industry.

According to market participants interviewed by Caifin News reporters, mergers and acquisitions will help accelerate the upgrading and transformation of traditional industries of listed companies, as well as expedite the development of emerging industries. Furthermore, mergers and acquisitions by listed companies can promote efficient resource allocation, improve the integration of the industry chain, and stimulate market vitality.

China Power Co., Ltd. launches dual initiatives

China Power Co., Ltd. speeds up the pace of green asset integration. On Friday evening, SPIC Industry-Finance Holdings under State Power Investment Corporation and Spic Yuanda Environmental-protection released a trading plan, which will involve nuclear energy assets, and hydropower assets, ultimately being developed as the core nuclear power operation asset integration platform of State Power Investment Corporation and the domestic hydropower asset integration platform. Both companies' stocks have been suspended since September 30 and will resume trading on October 21 (Monday).

Specifically, according to the restructuring plan of SPIC Industry-Finance Holdings, the company plans to transfer 100% equity of China Nuclear Energy Co., Ltd. and transfer 100% equity of State Power Investment Group Capital Holdings Co. on the same day. Later that evening, SPIC Yuanda Environmental-Protection released a restructuring plan indicating that the company plans to acquire 100% equity of Wuling Electric Power and 64.93% equity of Changzhou Hydropower, and issue shares to no more than 35 specific investors who meet the criteria to raise funds.

Public information shows that as a central enterprise listed production-finance platform, SPIC Industry-Finance's main business includes the energy and finance sectors. If this restructuring is successfully completed, SPIC Industry-Finance will join two other nuclear power giants, China National Nuclear Power (601985.SH) and CGN Power Co., Ltd. (003816.SZ), in the A-share market.

In the announcement, SPIC Yuanda Environmental-Protection stated that after the completion of this transaction, the company's main business will add hydropower generation and integrated development and operation of new energy in basin hydropower plants, positioning itself as a national domestic hydropower asset integration platform owned by China Power, further consolidating China Power's position as a comprehensive clean energy flagship listed platform mainly in hydropower, wind power, solar power, and high-quality thermal power.

The controlling shareholders of the above two listed companies are both China Power. Information shows that China Power was restructured and established in May 2015 by State Power Investment Group and China National Nuclear Technology Limited Company. It is the first energy company in China that owns all types of power generation, including photovoltaic, wind, nuclear, hydropower, coal, gas, and biomass by the end of July 2024. National Power's asset scale is 1.83 trillion yuan, with a total installed capacity of 0.244 billion kilowatts, of which clean energy accounts for 70.13%.

Caijing News reporters noticed that as one of the traditional Big Five power generation groups, China Power has a total of 6 A and H-share listed companies, namely China Power (02380.HK), Shanghai Electric Power (600021.SH), Inner Mongolia Dian Tou Energy Corporation (002128.SZ), SPIC Industry-Finance, SPIC Yuanda Environmental-Protection, and Jilin Electric Power (000875.SZ).

Central SOEs Accelerate Asset Integration

Recently, the M&A and restructuring sector has received a series of policy support, and the activity of A-share M&As and restructuring has significantly increased. According to Caijing News reporters’ incomplete statistics, since the release of the 'Opinions on Deepening the Reform of the M&A and Restructuring Market of Listed Companies' on September 24th, besides SPIC Yuanda Environmental-Protection and SPIC Industry-Finance, many listed companies including Chengdu Qinchuan IOT (688528.SH), H.B. Fuller (301297.SZ), and Optics Technology Holding (300489.SZ) have disclosed merger and acquisition plans.

The 'Opinions on Deepening the Reform of the M&A and Restructuring Market of Listed Companies' mentioned supporting listed companies to inject high-quality assets, enhance investment value. Enhance payment flexibility and audit efficiency, establish a simple restructuring audit process, enable absorption mergers between listed companies, and for companies with a market cap exceeding 10 billion yuan and maintaining A-quality asset quality evaluation for two consecutive years, issue shares to purchase assets (not constituting major asset reorganization). This streamlines the review process and shortens the registration time.

Zhongtai securities investment bankers told Caixin reporters that, from the perspective of listed companies, mergers and acquisitions can help listed companies improve their quality by integrating sse select resources industries index, accelerate the upgrading and transformation of traditional industries of listed companies, and promote the development of emerging industries. From a market perspective, mergers and acquisitions of listed companies can promote efficient allocation of resources and improve the integration of the industry chain. In addition, mergers and acquisitions can stimulate market vitality and inject new vigor into the market. Once the industrial chain is integrated, it will be more solid, and resource allocation will also be more flexible.

In September, 'China Shipbuilding' and 'China Shenhua' have ignited a wave of mega restructuring of state-owned assets in the A-share market. On September 9, Qinghai Salt Lake Industry announced that the controlling shareholder has signed a general agreement to establish China Salt Lake Group, with the actual controller changing from the Qinghai Provincial State-owned Assets Supervision and Administration Commission to China Minmetals Group. The long-rumored China Salt Lake Group has finally taken shape. On September 3, China Shipbuilding Corporation's subsidiaries, China Shipbuilding and China Shipbuilding Heavy Industry, announced that the two sides are planning for China Shipbuilding to issue A-shares to all shareholders of China Shipbuilding Heavy Industry in exchange for a merger with China Shipbuilding Heavy Industry.

The above investment bankers told Caixin reporters that central state-owned enterprises may have more advantages in terms of resource allocation, which is conducive to concentrating resources in a direction that complies with national strategy and concerns the national economy and people's livelihood.