Experts and major investment banks believe that steel, cement and automobile industries will become the core industries for mergers and acquisitions in 2006. In addition, department stores, retail, pharmaceuticals, tobacco, cultural industries, securities, IT, and home appliance industries may all There is a large merger and reorganization movement. With expectation of full circulation, mergers and acquisitions among enterprises will become more active, and the value of mergers and acquisitions of high-quality companies will gradually emerge.
Merger and reorganization will become the main line of A-share investment
In 2006, the M&A theme will become the main investment line throughout the A-share market, which will bring many investment opportunities.
The past year was the year when China's M&A and restructuring transactions broke out. Bank restructuring related to the country’s economic lifeline and the worldwide mergers and acquisitions of petroleum and petrochemicals have attracted worldwide attention. This year's mergers and acquisitions, the major funds, securities, investment banks and economic experts also put forward their own views.
A number of institutions and securities industry researchers believe that M&A themes will become the main investment line throughout the A-share market in 2006, and this will bring many investment opportunities. For the stock market in 2006, Changjiang Securities Research Institute believes that the full circulation of the stock market will become a catalyst for mergers and acquisitions. It is predicted that mergers and acquisitions between companies in the mainland securities market will continue to expand significantly.
Ma Jie, a merger and reorganization expert at China Merchants Bank, believes that for some domestic industries, its internal integration will continue in 2006. He said that in recent years, China's economy has maintained rapid growth. Due to the overheated investment in the previous period, some industries (iron and steel, cement, automobiles, etc.) have rapidly expanded their production capacity. Due to the impact of macro-control, demand has decreased and the production capacity is now overcapacity. For these industries, it is imperative to adjust the industrial structure and increase the industrial concentration.
Ping An Securities believes that China's banking industry has the needs and driving force of internal integration, and the merger and acquisition of the banking industry is an international trend; as its initial issuance of new shares at home and abroad, it will certainly attract more funding attention. Therefore, the integration of mergers and acquisitions will be the theme of investment throughout the banking industry in 2006.
Ping An Securities believes that with the gradual completion of the equity division reform in the A-share market, mergers and acquisitions under market conditions will be expected to become the focus and investment opportunity for the 2006 A-share market. Huabao Industrial Fund Company pointed out that the M&A theme will become a major market opportunity for the stock market in 2006. Under expected circulation, intercompany mergers and acquisitions will become more active, and the value of M&A for high-quality companies will gradually emerge.
The “Measures for the Strategic Investment Management of Listed Companies by Foreign Investors†issued jointly by the five ministries and commissions recently opened a broad channel for large-scale participation in mergers and acquisitions and reorganizations of listed companies in the future in the context of full circulation of foreign capital. Beijing Capital Investment Company believes that blue chip stocks with concepts of scarcity, monopoly, or appreciation of the renminbi, such as non-ferrous metals, ports, real estate, automobiles, aviation, and banks, are highly sought after by foreign capital, and the acceleration of the pace of foreign capital entry will inevitably lead to an inter-agency merger. Increased competition for high-value varieties.
Iron, steel, cement, and automobile are the first three horses
In 2006, the integration of the steel industry is an inevitable trend; the structural adjustment of the cement industry will develop in depth; the merger and reorganization of the automotive industry will accelerate.
China's steel industry is close to the critical point of large-scale mergers and reorganizations. The consolidation of the steel industry is an inevitable trend. However, due to the domestic steel companies' leading restructuring involves the integration of provinces and provinces and across regions, it touches on many issues such as local interests and taxation systems. Implementation is difficult, and foreign acquisitions may be simpler.
After Mittal Steel's successful acquisition of 36.673% of Hunan Hualing Pipeline, it opened up a precedent for large-scale participation of foreign-invested state-owned steel companies. In addition, Mittal Steel has also had “close contact†with companies such as Baotou Steel, Bayi Steel and Kunming Iron and Steel. Investment bankers said that Mittal’s main goal in China is to take shares until it acquires some medium-sized steel mills with annual output of 3 million to 4 million tons.
The merger and acquisition negotiations between Arcelor Group, the world’s second largest steel conglomerate, and Shandong Laiwu Steel Group are also in progress. At present, the two parties have reached an initial intention of holding 50% equity. If it succeeds in the end, the cooperation will break through the proportion of shares held by Mittal and Valin Steel, and Arcelor will hold 3542.3655 million shares of state-owned legal person shares in Laiwu Steel, accounting for 38.41% of the total share capital.
In 2006, the restructuring of the cement industry will develop in depth and enter the merger and reorganization phase. On the one hand, domestic leading cement companies carry out “combination†of various levels of small and medium-sized cement companies around the target market in order to further bring economies of scale into play. On the other hand, foreign cement giants are actively setting up points in the domestic cement market for domestic cement companies. The pace of mergers will be further accelerated and the penetration of the domestic cement industry will increase.
Compared with the small-scale mergers and acquisitions that domestic companies have gradually started to expand, the acquisition of foreign capital by foreign companies is a big deal. The merger of the world cement giant Lafarge and Shui On Jianye entered the top three cement industry in China, and later integrated the southwest cement market, becoming the leading group in the cement industry in the Southwest; Hossin shares in Huaxin Cement and plans to participate in it. Henan Province cement industry integration; Heidelberg hit the northwest market; Morgan Stanley Tim Wai Asia Investment Co., Ltd. will jointly with CDH China Fund Management Co., Ltd. invested 50 million US dollars, and acquired 30% shares of Shandong Cement Group Co., Ltd. When domestic companies are under strained funding, the desire for foreign investment for many years has become easier to achieve.
"In fact, the great integration of China's auto industry is inevitable. From the perspective of market economy, overcapacity is a prerequisite for full market competition, and its impact on the automotive industry is to accelerate the pace of industry restructuring." Dr. Cao Jianhai analyzed it.
Cao Jianhai believes that excess capacity will become one of the driving forces behind the reorganization of the automobile industry. The strength of large enterprises has laid the foundation for restructuring. Conversely, the decline in profits and rising costs have led to the marginalization of a group of small car manufacturers with an annual sales volume of about 10,000 cars in the structural adjustment of the car market.
Some experts predict that FAW and Dongfeng belong to the enterprises directly under the Central Government; Chang'an belongs to the China Weapons Corporation and is a military industrial enterprise; SAIC, BAIC, and GAC are all local state-owned enterprise groups. Due to a variety of reasons, it is difficult for these major groups to merge and reorganize temporarily. The biggest possibility is to take the six major auto groups as the core to merge and restructure other smaller auto companies.
In 2006, another major support for the acceleration of mergers and acquisitions in the automotive industry came from the government. Since last year, the SASAC has begun to revamp the reorganization of the automotive central enterprises. According to Bai Jinfu, deputy director of the SASAC Research Center, the six companies under the SASAC - FAW, Dongfeng, Hafei, Changhe, Shenfei Hino and Xi'an Xiwo - will face inevitable restructuring.
Which industries will become new acquisitions?
CICC pointed out that with the intensified competition in the industry, the internal integration of the retail industry is further deepening, and the source of funds is concentrated in high-quality companies, and the polarization of individual stocks will be inevitable.
The share reform makes it easier for departmental listed companies to be branded or acquired. The reason why departmental listed companies are favored by industrial capital, the industry pointed out that the reason is that, on the one hand, commercial real estate assets have great potential for revaluation appreciation. Because departmental listed companies are basically in prime locations in cities, their real estate has strong value-added capabilities; on the other hand, such companies have ample cash flow, which is very attractive to many industrial capital; This type of company has a special equity structure - the proportion of major shareholders holding shares is generally low, through the secondary market acquisitions easily obtain control of listed companies.
Beginning in 2005, China’s retail industry’s merger and reorganization frenzy has also become even more surging: Bailian has restructured its business, Lianhua Supermarket has acquired Guangxi Best Use, B&Q took over O'Brien’s business in China, and GOME swallowed Easy Home, Black Swan and Wuhan Zhongshang’s home appliance segment, Yongle bought Tsann Kuen and reorganized Xiamen Siwen Electric Co., Ltd.... In 2006, with the full entry of foreign retailers, there will be a wave of mergers and acquisitions in the domestic retail industry.
CICC pointed out that with the intensified competition in the industry, the internal integration of the retail industry is further deepening, and the source of funds is concentrated in high-quality companies, and the polarization of individual stocks will be inevitable. Industry leaders will be able to continue to share the benefits of urban consumption upgrades, while endogenous growth advantages will lead to higher quality earnings growth; while poor competitiveness will lack endogenous growth, companies that rely too much on expansion will not be able to maintain high growth. , Fashion consumption and fast-growing chain department store industry is expected to come to the fore in the future.
China has become one of the fastest growing pharmaceutical markets in the world, and the pharmaceutical economy has entered a stage of rapid growth. At present, the degree of concentration in the pharmaceutical industry in China has risen. Mergers and acquisitions are active. It is foreseeable that mergers and acquisitions will have a climax. China is now the second largest producer of bulk pharmaceuticals in the world, but it is far from being a pharmaceutical power. Of the existing 6,000 pharmaceutical companies, only 300 are large enterprises, and more than 1,000 companies are still struggling with losses. Looking at the domestic pharmaceutical companies bigger and stronger will only be achieved through asset mergers and acquisitions and restructuring. Considering that the pharmaceutical industry can withstand the impact of foreign investment after China's full access to WTO, accelerating the pace of mergers and reorganizations, expanding the asset scale of the pharmaceutical industry, and increasing the concentration of the domestic market has become an urgent issue for the development of the Chinese pharmaceutical industry.
The State Council issued a document a few days ago to provide clear instructions for the reorganization of the property rights relationship of the tobacco industry. At the national tobacco economic work conference held in January 2006, after this difficult issue was broken, inter-provincial reorganization will set off a climax. The brewing of Guangdong, Guangxi and Guangxi, which has been brewing for a long time, is likely to come out on top. At the same time, major multinational tobacco companies have also adjusted their strategies, forged alliances and achieved mergers and acquisitions, resulting in transnational tobacco groups that are highly resistant to risks, such as the merger and reorganization of BAT, the integration and reconstruction of China Tobacco, and so on.
The "Several Opinions on Deepening the Reform of the Cultural System" issued by the relevant departments recently supports and encourages the cross-regional and cross-sector mergers and reorganizations of large state-owned cultural enterprises and enterprise groups. The "Opinions" pointed out that we must vigorously increase the scale of the cultural industry, intensification, and professionalism. Cultivate and build a number of industrial bases for publishing, electronic audio-visual, film and television and animation production, performing arts, exhibitions, and distribution of cultural products. Focus on cultivating and developing a group of large-scale cultural enterprises and enterprise groups with strong strength, strong competitiveness and influence, supporting and encouraging large-scale state-owned cultural enterprises and enterprise groups to implement cross-regional and cross-industry mergers and reorganizations, and encouraging media subordinates in the same area to operate Sex companies have mutual shares. Support small and medium-sized cultural units to develop in the direction of “professional, refined, special, and new†and form a dynamic and advantageous industrial cluster.
In the financial sector, especially the banking sector, after China’s accession to the WTO, foreign banks have significantly accelerated the pace of mergers and acquisitions with Chinese banks, in addition to actively preparing for establishment of business operations in China. Participating in and controlling Chinese-owned banks has become a foreign bank’s occupation of the Chinese market. Important means and inevitable choices. For domestic banks, in order to realize complementary advantages, share resources, increase their scale, and adapt to the fierce competition in the future, various banks in China have sought out new ways of introducting inlining, and becoming bigger and stronger has become an international financial stage. trend.
Market research company IDC believes that the pace of mergers and acquisitions in the IT industry in 2006 will further accelerate. In 2006, similar open source software cooperation will be further promoted. The R&D model of "individual combat" will gradually fade out in the IT field, and the mode of cooperation will be popular. Only in this way can we maintain the market leadership of all companies.
In 2005, China's home appliance industry ushered in the third wave of M&A and reorganization. The most significant feature of this wave is “reorganizationâ€. And in 2006, this reorganization will continue to be characterized, and it will even result in repetitive and tortuous processes.
With the gradual realization of China’s commitment to China’s accession to the WTO, China’s domestic market will also gradually open to the outside world. What is certain is that in the more and more open China market, various kinds of mergers and acquisitions and economic restructurings, especially those with international capital participation, will become more and more common.