Attacking the main business and expanding the blue ocean, Shanghai central state-owned enterprises to create a "model room" for high-quality development

Securities Times reporter Chen Yukang

The Central Economic Work Conference held on December 11-12 emphasized the need to thoroughly implement the reform and upgrading of state-owned enterprises, enhance core functions and improve core competitiveness. In the capital market, the "Three-Year Action Plan for Comprehensive Services for Central Enterprises of the Shanghai Stock Exchange" was launched in 2020, and the Shanghai Stock Exchange launched a new round of three-year action plan last year.

The central state-owned enterprises in Shanghai have taken multiple measures to promote quality and efficiency. On the one hand, it will make its main business bigger, stronger and better, and strengthen the core advantages of its main business, and on the other hand, it will actively use the platform and capital operation means of listed companies to efficiently gather high-quality resources. In addition, the central state-owned enterprises in Shanghai have continuously strengthened R&D and innovation, and continued to return to investors, and the quality of listed companies has been significantly improved.

Stick to the main responsibility and focus on industry

State-owned enterprises occupy a dominant position in major industries and key areas that are related to the lifeblood of the national economy, and they need to shoulder not only economic responsibilities, but also social responsibilities. In recent years, sticking to the main responsibility and making the main business stronger, better and bigger have become the top priority in the work of central state-owned enterprises.

"The company has always taken ensuring a stable supply of energy as the most fundamental responsibility and mission. Huang Lixin, general manager of Huaneng International, said in an interview with the Securities Times reporter that the company closely tracks the changes in the coal market, scientifically formulates procurement strategies, ensures the stable supply of coal for power generation, and actively plays the role of thermal power peak supply and system regulation, and does a good job in the "ballast stone" of the power system. In addition, we will continue to increase the installation and production of new energy capacity.

According to market forecasts, non-fossil energy generation will account for more than 50% of total electricity generation by 2035, becoming the main force of electricity supply. However, renewable energy power generation is random and volatile, and cannot independently guarantee reliable power supply.

Based on the national conditions of the mainland's coal-based energy structure, Huaneng International adheres to the transformation from incremental development to stock optimization, coal-based to multi-fuel, and power generation to diversified supply. Huang Lixin said, "The company attaches great importance to the reality of the high proportion of coal-fired power units, and conforms to the trend of the transition of coal-fired power units from the main power supply of electricity supply to the comprehensive guarantee and system regulation power supply that provides reliable capacity, peak regulation and frequency regulation and other auxiliary services." The company will achieve high-quality development according to the ideas of alternative development, transformation and transformation, shutdown and standby, and capital operation. ”

As the national team and main force in the construction of digital China, China Unicom has made every effort to build the "pillar of a great country" of the digital base.

The person in charge of the relevant department of China Unicom told the Securities Times reporter that the company focuses on improving the allocation and operation efficiency of state-owned capital, and further promotes co-construction and sharing with friends. For example, the company has built the world's first and largest 5G SA co-construction and sharing network with its friends, saving hundreds of billions of state-owned investment and operating costs, and accelerated the construction of a 900MHz low-frequency base network to further improve the network coverage in rural and remote areas.

At the end of 2021, on the basis of achieving moderate scale development, China Chemical formulated and implemented the "Two Businesses" strategy, that is, to accelerate the construction of a comprehensive solution service provider in the field of industrial engineering and accelerate the construction of a supplier of high-end chemicals and advanced materials. Under the guidance of the "two businessmen" strategy, China Chemical has regained its vitality.

The relevant person in charge of China Chemical told the Securities Times reporter that on the one hand, the company continued to enhance the core competitiveness of engineering transformation, and successfully implemented a number of major projects with global influence such as Ningxia coal-to-liquid project, Yulong Island refining and chemical integration project, and Dalian Hengli refining and chemical integration project. On the other hand, we will promote the transformation of chemical engineering enterprises into new chemical material enterprises, and promote the integrated development of "scientific and technological research and development + characteristic industry".

In recent years, the overall operating level and development quality of central state-owned enterprises have been steadily improved. According to the data, in 2022, 632 central state-owned enterprises in Shanghai will be profitable, accounting for about 83%, and 583 will be profitable for three consecutive years, accounting for about 76%.

Make use of the capital market to promote development

In the view of industry insiders, the quality and efficiency improvement of central state-owned enterprises not only need endogenous and reform forces, but also need to seek more diversified driving forces, and the capital market is the "big stage" for central state-owned enterprises to improve quality and efficiency.

As a listed company platform for CSSC's core business, CSSC actively leverages the capital market to support the high-quality development of its entity business.

In an interview with the Securities Times, Shi Weidong, general manager of China Shipbuilding, said that in 2020, the company completed the largest capital operation "Deep Blue Project" in the capital market that year, that is, the market-oriented debt-to-equity swap and major asset restructuring and raising supporting capital project. The company successfully introduced 18 state-owned investment institutions, with a total of 16.89 billion yuan of debt-to-equity swap funds, and raised 3.8668 billion yuan of supporting financing. While achieving a direct financing scale of 20.756 billion yuan, the core military and civilian ship business such as Jiangnan Shipbuilding under China Shipbuilding Group was integrated into a listed company, with a total transaction scale of more than 41.2 billion yuan.

"The smooth implementation of the 'Deep Blue Project' is conducive to improving the layout of the company's shipbuilding and repair sector, giving full play to the synergistic effect of the shipbuilding and marine business, and reducing the leverage level and financial risk for the shipbuilding industry enterprises that were in a cyclical downturn at that time. Shi Weidong said.

The mergers and acquisitions carried out by central state-owned enterprises through the platform of listed companies are not only conducive to the enhancement of core functions, but also can efficiently promote the accelerated collection of high-quality resources to central state-owned enterprises.

According to the data, since 2020, the central state-owned enterprises in Shanghai have disclosed a total of 118 major asset restructurings, with a total transaction amount of more than 590 billion yuan; Since 2023, 20 central state-owned enterprises in Shanghai have launched major asset restructuring plans.

In recent years, spin-offs and listings have also become a means for Shanghai central enterprises to rationalize their business structures and promote the value discovery of their subsidiaries. Up to now, 32 central state-owned enterprises have launched spin-off plans in Shanghai, of which 12 have been listed. For example, China Energy Construction Co., Ltd.'s spin-off subsidiary, YIPLI, was reorganized and listed to further focus on its business, promote the expansion and strengthening of the civil explosive business in vivo, and enhance the profitability and comprehensive competitiveness of the company's civil explosive business;

Ride the wind and waves to the blue ocean

The Central Economic Work Conference held on December 11-12 proposed to lead the construction of a modern industrial system with scientific and technological innovation. It is necessary to vigorously promote new industrialization, develop the digital economy, and accelerate the development of artificial intelligence. We will build a number of strategic emerging industries such as biomanufacturing, commercial aerospace, and low-altitude economy, and open up new tracks for future industries such as quantum and life sciences.

To create strategic emerging industries and open up new tracks for future industries, central state-owned enterprises strive to play the role of "pioneers" in them. The Securities Times reporter found in the survey that at present, a number of central state-owned enterprises have increased investment in strategic emerging industries, and formed a certain competitive advantage and industrial development leadership.

In July 2022, the first phase of the key device of China Chemical Tianchen Qixiang Nylon New Material Industrial Base was successfully started up and produced high-grade products, and the adiponitrile project was successfully put into operation in Zibo, Shandong, breaking the foreign monopoly on the key raw materials of high-end material nylon 66 - this is an important achievement of China Chemical to accelerate the layout of strategic emerging industries.

The relevant person in charge of China Chemical told the Securities Times reporter that the company was included in the new materials and industrial software industry responsibility unit of the central enterprise renewal action by the State-owned Assets Supervision and Administration Commission, and will effectively play the leading role of the central enterprises in the construction of a modern industrial system.

In October this year, the company successfully held the industrial chain integration and development promotion meeting, BASF, National Energy, Wanhua Chemical and other upstream and downstream enterprises participated in the meeting, and signed a total of 19 contracts for strategic emerging industries such as high-end chemicals and new chemical materials, scientific and technological research and development, with a total amount of more than 150 billion yuan. The relevant person in charge of China Chemical said.

The reporter also learned that China Chemical has built a number of new chemical material production and research and development bases in Chongqing, Fujian, Xinjiang and other places. HPPO, coal-to-ethylene glycol, phase change materials and other industrial projects have been implemented in an orderly manner, providing new momentum for the company to accelerate the construction of a "high-end chemical and advanced materials supplier".

Standing in the first echelon of the construction of digital China, China Unicom is also actively deploying and serving future industries.

5G-A is the technology that connects the past and the next in the transition to 6G. At the 2023 China 5G Development Conference, Zhang Yunming, Vice Minister of the Ministry of Industry and Information Technology, pointed out that it is necessary to continue to seek innovation, forward-looking layout of 5G-A technology research, standard development and product research and development, and accelerate the evolution and commercial deployment of 5G lightweight (RedCap) technology. As an industry leader, China Unicom has already made a layout in the field of 5G-A.

"Focusing on new technologies such as 5G RedCap, passive IoT, and synaesthesia, we have created a number of 'new models' such as Shandong State Grid Electric Power and Baowu Steel Coil Factory, and continue to expand new space for 5G development. The person in charge of the relevant departments of China Unicom told the Securities Times reporter that China Unicom also explores the creation of a new 5G paradigm with leading enterprises at home and abroad, and lands the 5G-A low-latency flexible production line on the leading domestic manufacturing enterprises such as Midea Group and Great Wall Seiko.

In the research and development and application of artificial intelligence (AI) technology, China Unicom has also made steady progress. According to reports, internally, more than 100 network AI applications have been launched, and the intelligent service of the national intensive AI customer service system accounts for more than 80%, reaching the industry's leading standards, and saving nearly 100 million yuan in average annual costs. Externally, for industry applications, AI covers 11 key industries and 30+ typical scenarios, driving billions of yuan in revenue.

As the only industrialization group of rail transit equipment in mainland China, CRRC plays an irreplaceable leading role in the transformation and development of the rail transit equipment industry in mainland China, and is a typical representative of the high-end equipment manufacturing industry in mainland China. Sun Yongcai, Secretary of the Party Committee and Chairman of CRRC, said that in the future, CRRC will accelerate the upgrading and iteration of traditional industries, accelerate the expansion of strategic emerging industries, and accelerate the cultivation of future industries, so as to add new momentum for high-quality development to the construction of a modern industrial system of "double tracks and double clusters".

The growth of R&D investment can be seen in the continuous entry of central state-owned enterprises into strategic emerging technologies. According to the data, in 2022, the total R&D expenditure of central state-owned enterprises in Shanghai will be 574.184 billion yuan, a year-on-year increase of 25.56%, and the R&D expenditure of 15 central state-owned enterprises such as China State Construction, PetroChina, and SAIC will exceed 10 billion yuan. In the past three years, the median R&D expenditure of central state-owned enterprises in Shanghai has steadily increased from 82 million yuan to 125 million yuan, and the number of companies accounting for 3% of R&D has increased from 266 to 287. In the first three quarters of 2023, the total R&D investment of central state-owned enterprises in Shanghai exceeded 341.3 billion yuan, an increase of nearly 8 percentage points year-on-year.

Dividend returns enhance investors' sense of gain

The central state-owned enterprises in Shanghai are the main force of cash dividends. According to the data, in 2022, the total dividends of central state-owned enterprises in Shanghai will exceed 1.38 trillion yuan, accounting for 81% of the total dividends of Shanghai companies, and about seventy percent of central state-owned enterprises have paid cash dividends, of which more than half of them have paid dividends of more than 30%.

Judging from the situation in the past three years, the cumulative dividends of central state-owned enterprises in Shanghai from 2020 to 2022 will reach 3.47 trillion yuan, contributing nearly eighty percent of the dividends of the whole market all year round. In the past three years, the cumulative dividend amount of the "six major banks" has reached 1.17 trillion yuan, and the cumulative dividend of ICBC has reached 317.2 billion yuan, which is the highest dividend amount in the whole market. In terms of stability, more than 40% of central state-owned enterprises have continued to pay cash dividends of more than 30% in the past three years, and 46 central state-owned enterprises such as Sinopec, China Shenhua and Shandong Iron and Steel have paid cash dividends of more than 50% for three consecutive years, continuing to return investors with real money.

Huang Lixin said in an interview with a reporter from the Securities Times that the company attaches great importance to shareholder returns and pays cash dividends every year from 1998 to 2020. Since 2012, the company has further clarified the dividend policy, stipulating a high proportion of cash dividend policy of not less than 50% in the articles of association, and has paid dividends of about 62.7 billion yuan to shareholders over the years.

It is worth noting that increasing holdings and repurchases has increasingly become an important means for central state-owned enterprises in Shanghai to give back to investors. According to statistics, from the beginning of the year to mid-December, 27 central state-owned enterprises have disclosed the repurchase plan, and the amount of the repurchase plan has been completed and the upper limit of the repurchase plan in the implementation totals more than 12 billion yuan, such as Baosteel shares announced in mid-October that it intends to repurchase no more than 3 billion yuan, which is the third time that the company has thrown out the repurchase plan since its listing, fully boosting market confidence. 65 central state-owned enterprises disclosed their plans to increase their holdings, and the amount of the completed holdings and the upper limit of the amount of the plans under implementation exceeded 17 billion yuan.