China's first publicly traded private tire company, Saihuan (601058), plans to spend 320 million yuan to acquire two peer companies.
For the tire industry in the downturn, this is a long-lost and rare bright color. Most analysts believe that during the downturn of the industry, they can merge at low prices, which will help expand the scale of the company and increase its competitiveness.
Invested 320 million in two mergers and acquisitions. On July 10, the company announced that the company plans to purchase 100% equity of Shenyang Peace Meridian Tire Manufacturing Co., Ltd. (hereinafter referred to as Shenyang Peace) with no more than 120 million yuan; it plans to acquire no more than 200 million yuan. Shandong Jinyu Industrial Co., Ltd. (hereinafter referred to as Jinyu Industry) has a 49% stake.
According to statistics, the principal business of Shenyang Peace is the manufacture and sale of radial tires with a registered capital of RMB 120 million. At present, it has formed an annual production capacity of 1.2 million sets of all-steel radial truck tires. The main business of Jinyu Industry is the production and sale of semi-steel radial tires with a registered capital of 180 million yuan and an annual production capacity of 10 million sets of semi-steel radial tires.
For the aforementioned mergers and acquisitions, the company's explanation is that in order to further expand the scale of production and operation, enhance the competitiveness of enterprises.
In fact, as early as this time ago, the company has already begun the pace of mergers and acquisitions, through the acquisition of upstream raw material companies to control costs. On May 28, the company’s subsidiary acquired 51 percent of Taihua Loyong (Thai Rubber Corporation) for 32 million yuan. It is worth noting that Thailand's third-largest natural rubber producer and processor, Taihua Guar (VW) Co., Ltd., holds a 48.99% stake in Taihua Rayong.
In recent years, the racing stocks that landed in the capital market in June last year witnessed extremely rapid industrial expansion. Between 2008 and 2010, the company's production capacity of radial tires surged from 2.8 million to 9.1 million. Since then, with an annual production capacity of 10 million semi-steel radial tires, the company's tire production capacity has increased to 11 million, including 2.5 million all-steel radial tires and about 8.5 million semi-steel radial tires. If the acquisition is successful, the company's production capacity will expand by about 50%.
Despite the rapid expansion of the Saiwan shares, the days are not easy. In 2011, the company and Tire Tire A (000589) became the only two tire companies whose net profit (after deducting non-recurring gains and losses) decreased, falling by 13.56% and 47.84% respectively.
Or due to the lower asset prices in the current tire manufacturing industry is generally sluggish, with Shandong, an important base for domestic tire production, its natural rubber demand accounts for more than 50% of total domestic demand. A rubber trader told the reporter that the current operating rate of Shandong tire companies has achieved seven good results, most manufacturers have more than one month of inventory, production and management in trouble.
Since mid-May, rubber stocks in Qingdao Bonded Port Area have increased again. According to industry sources, at present, rubber stocks in the bonded port area of ​​Qingdao have reached 170,000 tons, and as the volume of goods shipped by traders to Hong Kong increases in June, rubber inventories will increase.
In the context of the winter in the industry, why is the Saiwan shares frequently refinancing their peers?
Zhou Sijie, an industry analyst with Guojin Securities (600109), told this reporter that when the industry is in a downturn, the acquisition is mainly due to the low price of assets. When the industry situation is poor, it is often the active period of mergers and reorganizations. At present, the tire manufacturing industry has fallen into a dilemma of high sales and high profits since 2008.
In this regard, Xue Shengwen, senior researcher of China Investment Advisors, agrees. He told this reporter that the company’s expansion of acquisitions was based on the consideration of low acquisition costs in the current downturn of the market and a reasonable expansion of the tire industry’s future.
Yang Ruomu, analyst of Dongxing Securities Fundamental Chemical Industry, said that after the completion of this acquisition, Saiwan Stock will add 4.9 million pieces of semi-steel tire production capacity, 1.2 million pieces of all-steel tire production capacity, and the company’s production capacity will exceed 20 million pieces. Rapidly increase about 50%. The acquisition shows the determination of the race to become bigger and stronger. Due to the obvious scale effect of the tire industry, the larger the production scale, the higher the corporate profitability.
Insiders pointed out that in the increasingly fierce competition both at home and abroad, whether it is the merger and reorganization between tire companies, or the integration of resources in the upper and middle reaches of the industrial chain, should be seen as the domestic tire companies to respond to market changes in the positive Adjustment. A series of acquisitions of Saiwan shares may open up the consolidation and reorganization of China's tire industry.
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