CIMC groups thunderbolt: over 4 billion impairment of offshore engineering business, over 8 billion loss

category:Finance
 CIMC groups thunderbolt: over 4 billion impairment of offshore engineering business, over 8 billion loss


The reporter of daily economic news noted that CIMC has been in the field of offshore engineering for 11 years, and once regarded the business as a core business segment with major development and great growth potential in the future. However, the companys offshore engineering business lost money continuously, with a cumulative loss of more than 8 billion yuan.

Sudden thunder

According to the announcement of CIMC group on the evening of December 30, 2019, combined with the actual operation of the companys offshore engineering business and future industry trend, market pattern, platform market demand, future price / rent fluctuation, utilization rate change, cost and expenditure fluctuation and other comprehensive factors, the company judges that there is a large sign of impairment of platform assets related to offshore engineering business.

At present, the asset impairment test of CIMCs offshore engineering related platforms is still in progress, but the company expects to accrue an impairment of about 4-5.5 billion yuan in 2019.

According to the data, CIMC is currently mainly engaged in the manufacturing and service of containers, road transport vehicles, energy, chemical and liquid food equipment, marine engineering equipment and airport equipment. Among them, the manufacturing of containers and road transport vehicles is the companys main source of income. According to the public information, the companys production and sales of standard dry cargo containers, refrigerated containers and tank containers rank first in the world; the company is also one of the largest road transport vehicle manufacturers in China, and one of the three largest passenger boarding bridge manufacturers in the world.

Interestingly, such a manufacturing giant under the name of zhongzitou has no controlling shareholders or actual controllers.

According to CIMCs 2019 half year report, China Merchants Group indirectly controls 88000000 H shares of the company, accounting for 24.58% of the companys total share capital. COSCO Group indirectly controls 295 million H shares and 519 million a shares of the company, with a total shareholding ratio of 22.71%. China Merchants Group and COSCO Shipping Group are both under the SASAC of the State Council.

Investors were also surprised by CIMCs sudden explosion. Some investors in the stock bar call Thunderbolt rolling, and some worry about the next is it going to count the board?

At present, the total share capital of CIMC group is about 3.58 billion shares, including 1.52 billion a shares and 2.06 billion H shares. As of December 31, 2019, CIMC A shares fell 3.73%, CIMC H shares fell 6.79%.

In the first half of the year, offshore industry lost 700 million yuan

The offshore engineering business belongs to the expansion business of CIMC group. In retrospect, SharpVision, a wholly-owned subsidiary of CIMC, signed an acquisition agreement in March 2008. According to the agreement, SharpVision plans to spend $566 million to acquire Yantai Raffles shares held by Zhang Li through brighttouch investment limited and Leung Kee Holdings Limited. Upon completion of the transaction, SharpVision will own 29.9% of Yantai raffles, becoming the companys largest shareholder.

According to the announcement issued by CIMC at that time, Yantai Raffles is the worlds leading ship and marine engineering facility construction company, and the largest and third largest semi submersible marine engineering equipment builder in China and the world.

Before CIMCs acquisition, Yantai Raffless performance was fair. In 2006, the companys net profit was s $18.491 million; in the first eight months of 2007, the companys net profit was s $18.028 million.

For this acquisition, CIMC group is full of expectations. Listed companies have said that the transaction will have a positive impact on the companys future profit growth; it will help the company enter the field of offshore oil and gas development equipment, namely the construction business of special ships and offshore engineering.

But in 2008, Yantai Raffles began to lose money. CIMC still chose to increase its position. By the beginning of 2010, the company had held 50.01% of Yantai raffles, becoming its controlling shareholder. In the view of listed companies, holding Yantai Raffles will lay the foundation for the growth of its offshore engineering business. The company even regards the offshore engineering business as one of the core business segments with great development potential in the future.

In its first year as a shareholder of Yantai raffles, CIMC was hit hard. In that year, CIMCs offshore engineering business realized a sales revenue of 2.444 billion yuan, but a loss of 1.109 billion yuan. In 2011, CIMC lost 1.116 billion yuan in offshore engineering business and 527 million yuan in 2012. From 2008 to 2018, the accumulated loss of CIMCs offshore engineering business exceeded 7.5 billion yuan. In the past two years, CIMCs loss in offshore engineering business is amazing, including a loss of 1.039 billion yuan in 2017 and 3.449 billion yuan in 2018.

In the first half of 2019, CIMCs offshore engineering business continued to lose 703 million yuan. Cumulatively, since the companys involvement in the offshore engineering industry, the companys accumulated loss of such business has exceeded 8 billion yuan.

For the offshore engineering business, CIMC also seems to be considering integration. In July 2019, Caixin once reported that China Merchants Group planned to integrate the shipping and marine engineering businesses of CIMC and AVIC international. After the integration, relevant businesses will be operated by China Merchants industrial group, a subsidiary of China Merchants Group. At that time, CIMC had responded that it could not confirm the authenticity of the scheme involved in the above report, but the reorganization of the companys offshore engineering business had been advancing.

In the middle of December 2019, CIMC and Yantai municipal government signed a strategic agreement to cooperate in the preparation of the North headquarters of China National Offshore Engineering Co., Ltd. and carry out cooperation in deep-sea areas such as far-reaching marine fishery, offshore wind power, marine chemical industry and marine engineering equipment.

Source: editor in charge of daily economic news: Yang bin_nf4368