The domestic textile industry capital platform drama debut

As the "State-owned Enterprise Reform Roadmap" becomes clearer and clearer, various industries have once again witnessed a "revolutionary fever," and the development of a mixed-ownership economy is the "big play" in this round of deepening the reform of state-owned enterprises. In 2014, the textile industry still faces the challenge of not improving the fundamentals. The reform of state-owned enterprises in full swing will improve the profitability of state-owned assets in the short term. In the long run, the integration of the M&A and innovation in the textile industry will usher in a new peak. This strong driving reform will greatly improve the value of these companies.

As the “State-owned Enterprise Reform Roadmap” becomes clearer and clearer, various industries have once again witnessed “revolutionary fever”, and the development of a mixed-ownership economy is the “key event” in this round of deepening the reform of state-owned enterprises. For the textile industry, the market itself is highly competitive, but due to historical problems, the state-owned textile enterprises in various regions are faced with reform problems.

According to statistics, there are currently 16 listed companies in the textile industry, state-owned enterprises and local state-owned enterprises. The total market value of state-owned enterprises accounts for about 16% of the total market value of the entire textile apparel segment. From the perspective of sub-sectors, the enterprises in the background of state-owned enterprises are mainly concentrated in the processing and manufacturing sector, including 6 cotton spinning companies, 2 wool textile companies and 4 garment manufacturing companies.

Although most of these textile companies perform well in the capital market and have abundant resources, the operating efficiency is declining.

Among them, except for Jihua Group (601718), which is a company with a military background, the other 15 companies are generally competitive companies. There are common defects in the enterprise system, the industrial chain is not smooth, the performance is declining, and there are even ST risks. In the same way, this round of powerful reforms will greatly enhance the value of these companies.

Start first*

Shanghai's first "good platform"

In this round of state-owned asset reforms, Shanghai has started the "first *" of state-owned asset reforms because of its financial center status and the large body and assets owned by state-owned enterprises.

On December 17, 2013, Shanghai Deepening the State-owned Assets Reform and Promoting Enterprise Development Work Conference officially released the Opinions on Further Deepening Shanghai State-owned Assets Reform to Promote Enterprise Development. In accordance with the planning of the Shanghai State-owned Assets Supervision and Administration Commission, this year will focus on the industrial chain, value chain and function chain, strengthen vertical integration and horizontal linkage, promote the diversification of property rights in competitive enterprises, and introduce strategic investment in competitive businesses of functional and public service enterprises. Explore the franchising of the public service industry.

Shanghai is the most concentrated area of ​​state-owned textile companies. There are four listed companies, namely Shanghai Sanmao (600689), Longtou (600630), Shenda (600626) and Kaikai (600272).

In fact, related reforms have already begun. At the end of 2013, Conch Apparel, a wholly-owned subsidiary of the leading shares, plans to replace 100% of the equity of Malu Shirt Factory with 100% of the equity held by Shenda Group.

Leading shares and Shenda shares are listed companies controlled by Shanghai Textile (Group) Co., Ltd. This asset replacement also opened the prelude to the adjustment of Shanghai's textile state-owned enterprises. According to related persons of the Shanghai State-owned Assets Supervision and Administration Commission, Shanghai Textile Group is bound to make good use of the "well-established platform" of Shenda shares to develop mixed ownership during the formulation of the group reform plan.

Capitalist "pioneer effect" under the top-level design

Under the guidance of the “majority of companies from management to management of capital” and “transition of single ownership to mixed ownership” proposed by the country at the macro level, the situation in various localities is not the same.

Take Shenzhen as an example, the core idea of ​​its reform is to “revert to nuclearization”, that is, to divorce non-core business and solve competition in the same industry, highlight the main business of the group company, and integrate the main business of a certain area into a leading company. The only listed group in a single industry.

Shenzhen City Investment Holding Co., Ltd. (“Shenzhen Investment Co., Ltd.”) is the state-owned asset management company that focuses on property rights management, capital operations, and investment and financing. On March 17th, Shenzhen Investment Holding Co., Ltd. planned to transfer 26%~29% of shares of Shenzhen Textile A (000045). According to the announcement, Shenzhen Investment Group has no less than 132 million shares and no more than 147 million. Shares, the transfer price is not lower than the weighted average price of the previous 30 trading days.

The difference from the "step-by-step withdrawal" approach of Shenzhen state-owned assets is that the Hunan State-owned Assets Supervision and Administration Commission closely follows the transformation and upgrading of enterprises. Huasheng Co., Ltd. (600156), due to poor performance in its main textile business over the years, under the guidance of Hunan SASAC, the actual controller, Huasheng Group’s major shareholder, Hunan Huasheng Group, replaced the listed company’s assets at the end of 2012. Into Hunan Huiyi Pharmaceutical Co., Ltd., a 51% stake, from the traditional textile industry to transform the high-end pharmaceutical equipment industry.

As a result, Huasheng Co., Ltd. (600156), which suffered a loss of 26.41 million yuan in the medium term, achieved a counter-attack in its annual results. On the evening of January 27, the company disclosed the 2013 annual pre-addition announcement. It is expected that the net profit attributable to the shareholders of the listed company in 2013 will increase by 1570% to 2050% compared with the same period of the previous year.

Clearing Reform Goals and Finding Investment "Main Melody"

From the perspective of the reform of the state-owned textile enterprises, through the reorganization or asset injection, the introduction of strategic investors, the withdrawal of state-owned capital, the equity incentives of management and employees, etc., to promote the flow of state-owned equity, will give full play to the advantages of state-owned assets. Enterprises directly face the competition with private enterprises and play their own initiative.

For the capital market, there are two main lines of investment in the theme of state-owned enterprise reform: First, the rediscovery of the value of the listed companies in the state-owned enterprise group, and on the premise of specialized reorganization and marketization, separate profitable and well-growth assets. Listing or injecting into listed companies and at the same time divesting other non-core business of the listed company will have a positive impact on the promotion of the market value of the company and the functioning of the ** function, so as to maintain and increase the value of state-owned assets. Second, the valuation of state-owned enterprises from "bigger" to "stronger" will increase the valuation of related companies. Promote industry-leading industry leaders to transition to strategic emerging industries, encourage state-owned enterprises to actively “go global”, and accelerate the development of state-owned multinational companies with strong international competitiveness.

However, Chen Qingtai, member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference, deputy director of the Economic Commission, and chairman of the China Association of Listed Companies, also pointed out that the system framework is not yet clear and rush to operate, which may create obstacles for subsequent reforms. It is necessary to clarify the objectives of the reform, the systems and mechanisms to be established, design a feasible plan, properly handle issues left over by history, carry out necessary pilot projects, and then conduct large-scale operations to ensure that this reform is carried out in an active and steady manner.

In 2014, the textile industry still faces the challenge of not improving the fundamentals. The reform of state-owned enterprises in full swing will improve the profitability of state-owned assets in the short term. In the long run, the consolidation and transformation and innovation of the textile industry will usher in a new peak.