Bao Wu to re-set production schedule Baosteel said the end of the year to complete the task of 605 million tons for 2 years

October 10 Baosteel, Wuhan Iron and Steel shares of the two companies will resume trading. However, the eve of resumption of trading, Baosteel and Wuhan Iron and Steel merger of two large steel enterprises, steel enterprises have received the relevant departments of the inquiry letter.
After the reorganization, how to do the task of capacity? For Baowu restructuring, not long ago, the Shanghai Stock Exchange issued a letter of inquiry, involving the production capacity, including a number of aspects. In addition, the letter of inquiry also requires the absorption side of the asset ownership defects and business conditions, Baoshan Iron and Steel shares out of the equity incentive plan related to accounting treatment, and the company 's financial implications and other issues supplementary disclosure.
The industry believes that the reorganization of Bao Wu to go to capacity and steel companies to create a new path, there is no small demonstration significance, it was caused by the Shanghai Stock Exchange inquiry. Analysts believe that Baowu after the merger of listed companies, will become the world's steel-listed companies ranked third in crude steel output of the new giant iron and steel.
International rating agency Moody's September 29, but in the report pointed out that the operation and financial situation of WISCO is relatively weak, may reduce Baosteel's financial capacity, Moody's that the integration of Baosteel has a negative credit impact. However, Moody's also believes that as part of the reform of the supply side of the government, the restructuring will accelerate the production capacity and enhance the competitiveness of steel enterprises survive, Baosteel Group and Wuhan Iron and Steel Group will benefit from the future.
Restructuring to speed up production capacity
When the outside world on the restructuring of Baosteel and Wuhan Iron and Steel is optimistic about the occasion, the integration between the two large domestic iron and steel enterprises, causing the attention of the relevant regulatory authorities.
September 27 Baosteel, Wuhan Iron and Steel shares announcement that the company received a letter of inquiry from the Shanghai Stock Exchange, asked for further disclosure of a more detailed restructuring plan.
In the letter of inquiry, the Shanghai Stock Exchange requires Baosteel and Wuhan Iron and further disclosure of content, including Baosteel and Wuhan Iron and Steel shares have reduced production capacity of the task indicators.
On the Shanghai Stock Exchange's inquiry, the two companies recently told the media, according to Baosteel Group and Wuhan Iron and Steel Group pressure reduction capacity of the responsibility of the book requirements, Baosteel, Wuhan Iron and Steel shares 2016-2017 years, respectively, 4.65 million tons of 1.4 million tons of crude steel production capacity.
Baoshan Iron and Steel and Wuhan Iron and Steel shares that will be in accordance with Baosteel Group and Wuhan Iron and Steel Group pressure reduction capacity of the responsibility of the book requirements, at the specified time node, according to changes in market conditions and their own business development needs, according to the quality of steel production capacity by the pressure drop Objectives and tasks, the two companies plan to compress production capacity will not be affected by the merger.
"For the end of 2016 to complete the above two years ahead of schedule to target production capacity tasks." Baosteel side said.
Analysts pointed out that the reason why Baowu restructuring received the Shanghai Stock Exchange inquiry letter, to a certain extent will affect the trend of steel production capacity. "If Baowu reorganization of the two companies to target production capacity to terminate, there may be a demonstration effect in the industry, other steel prices to the production task may also be affected, but also through restructuring to avoid production capacity. Leading steel enterprises strong combination, still go to production capacity, then other steel prices will not shirk to production capacity reasons.Therefore, the steel industry, Bao Wu to the production capacity will really be in place, will be the industry's attention. The analyst said.
Li Qiucai, an independent investor, believes that there is another potential demonstration effect of Baowu's merger. In terms of the iron and steel industry in the difficult situation, what is the way for China's iron and steel enterprises to develop, and this is exactly what Shanghai Stock Exchange Letter in the proposed transformation and upgrading of the problem.
In Baosteel's official website, with the eye-catching picture marked such a series of figures: 2015 sales income 230 billion yuan, profits 1.03 billion yuan, the main steel industry steel production of 36.11 million tons, ranking the world's iron and steel enterprises 5 . With the merger of Wuhan Iron and Steel, the newly formed steel production of crude steel is expected to leapt to the nation's No. 3 super-steel prices.
In the industry view, to do large-scale and strong are two concepts. When doing large-scale, technically able to maintain the leading real strong, will determine the status of steel enterprises in the industry arena.
For the transformation and upgrading of the inquiry, the industry believes that the two companies will focus on high-end products in the future. In Baosteel and Wuhan Iron and Steel's core products, including automotive steel, silicon steel, tin (chrome) plate, engineering steel, high-grade sheet, which are important raw materials of modern manufacturing, the market prospects.
"Although the domestic steel production is very large, but many areas of special steel, many steel prices in domestic prices and quality is difficult to compete with foreign advanced enterprises.If in the high-end areas to open up a new road, will be Bao Wu's contribution to the industry "Li Qiucai said.
Integration to enhance profitability
Baosteel Wuhan Iron and Steel "marriage", the day will be more flaming it?
When the outside world for the two steel enterprises cheered, the investment community that a new round of consolidation will bring positive to the two companies, the international rating agency Moody's rating in the September 29, but that the reorganization of Baosteel and Wuhan Iron and Steel, Baosteel has a negative credit impact.
"The operating and financial condition of WISCO is weak, which may lower the financial capacity of Baosteel Group, for example, the combined debt / EBITDA ratio of the two companies is close to 9.4 times, which is 5.7 times higher than Baosteel Group's 2015 level. Weaker indicators may increase the pressure on Baosteel Group Co.'s rating downgrade, "Moody's said in its latest report.
Moody's pointed out that Baowu's restructuring will cover anticipated capacity reductions, pricing, cost and profitability improvements, and the associated costs of retrenchment compensation, as well as the possible business strategies and debt levels of the reorganized syndicate which will have a significant impact on the performance of the two companies .
In fact, Wuhan Iron and Steel in the first half of the profit, is out from the trough.
According to Wuhan Iron and Steel shares data, the company also achieved a net profit of 273 million yuan in the first half, compared with 7.5 billion loss last year to achieve substantial losses. Wuhan Iron and Steel profitability, and the integration of Baosteel left a certain amount of imagination.
In the integration of the day before, Baosteel is not smooth sailing. And Wuhan Iron and Steel is similar to the integration of information disclosure and Wuhan Iron and Steel more than a year before the time, Baosteel is also trying to out of the downturn.
Baosteel in the official website of the external figures marked by the proud behind the last year experienced a decade since the trough.
Baosteel semi-annual report shows that the first half of operating income reached 77.99 billion yuan, 80.77 billion yuan more than last year's revenue, a slight decrease of 3.44%. Net cash flow from operations was approximately $ 8.28 billion, down about 12% from $ 9.4 billion in the same period last year.
Although such a report card is not perfect, but Baosteel is out of the doldrums since last year.
Baosteel 2015 annual report shows that the company last year net profit of 1.013 billion yuan. This figure compared with 5.823 billion yuan in 2014 decreased by 4.81 billion yuan, a record low for several years.
Media reports, Baosteel last year, the total profit of the main steel industry declined; in 2013 and 2014, Baosteel main steel industry profit of 6.09 billion yuan and 3.75 billion yuan respectively.
"The steel industry has been depressed since last year, which is the general market, Baosteel also affected by the downturn in the industry." An analyst said.
The face of industry difficulties, Wuhan Iron and Steel and Baosteel believes that after the reorganization of the two companies will increase synergies, help to enhance profitability.
"With advanced R & D and technological advantages, competitive cost and service advantages, after the reorganization of Bao Wu through purchasing, sales, product development, technological innovation, corporate culture and other aspects of effective integration, give full play to economies of scale and synergies, To achieve integrated operations, and further strengthen the sustained profitability. "Close to Baosteel and Wuhan Iron and Steel said.



Contact: Baosen Steel

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