Reporter: Zhang Wenyu Editor: He Juanjuan
After the termination of the 1.9 billion convertible bond project, Construction Machinery launched a new round of fixed increase to supplement liquidity and repay debts.
The net loss in the first three quarters reached 351 million yuan, and the total debt was 12.411 billion yuan, which is the main reason for the construction machinery to rush to raise funds.
Looking further, since the listing of the construction machinery three times ST, experienced asset replacement, industry mergers and acquisitions and other major restructuring matters, tossed for more than ten years, still limited industry characteristics, the main business of the enterprise is single, long-term high debt operation, once the performance does not meet expectations, it will face greater pressure to collect money.
If it is not for the strength of the controlling shareholder, it is really difficult to evaluate the situation of construction machinery in the capital market.
Shaanxi coal "blood transfusion"
On December 23, the construction machinery announced that the company intends to issue no more than 264 million shares to the controlling shareholder and actual controller Shaanxi Coal Chemical Group Co., Ltd. (hereinafter referred to as "Shaanxi Coal Group") at a price of 4.79 yuan per share, and the total amount of funds raised is expected to be no more than 1.265 billion yuan.
The reporter of "Daily Economic News" noted that before the issuance, Shaanxi Coal Group directly held 372 million shares of construction machinery, and indirectly held 50 million shares of the company through its wholly-owned subsidiary Shaanxi Construction Machinery (Group) Co., Ltd., accounting for 33.58% of the company's total share capital.
Image source: Construction Machinery Bulletin
Major shareholders invest real money to participate in the private placement, which can increase the equity ratio and consolidate control. After the completion of the issuance, the proportion of shares held by Shaanxi Coal Group in listed companies will be further increased.
Looking at the subscriber Shaanxi Coal Group, which is a leading enterprise in Shaanxi Province, its main business sector involves coal, coal chemical industry, coal power, steel, etc., with more than 60 secondary wholly-owned, holding and shareholding enterprises, and 5 listed companies.
In the 2023 Fortune Global 500 list, Shaanxi Coal Group ranked 169th with an operating income of US$75,871.2 million, a significant jump of 40 places from 209 in 2022.
This is not the first time that Shaanxi Coal Group has participated in the capital operation of construction machinery.
In 2009, Shaanxi Coal Group single-handedly led the restructuring of construction machinery, replacing the continuous loss of machinery manufacturing assets, and at the same time placing its subordinate mining engineering construction and industrial and civil construction assets with strong profitability to avoid its delisting in the same year.
From May 3 to June 27, 2018 and from May 16 to July 28, 2022, Shaanxi Coal Group increased its holdings of 23.99 million shares and 19.34 million shares of construction machinery through centralized bidding transactions, respectively, releasing a signal to the market that it is optimistic about the listing target.
In this 1.265 billion yuan private placement, the subscriber Shaanxi Coal Group promised not to transfer the new shares issued to it within 3 years, and the company's general meeting of shareholders agreed that Shaanxi Coal Group was exempted from issuing an offer.
Raising money to pay off debts?
Every reporter noticed that unlike most enterprises that raise large amounts of money for project construction or fixed asset purchase, one of the purposes of construction machinery is to repay debts.
According to its announcement, after deducting the relevant issuance costs, all the investment funds raised will be used to replenish liquidity and repay debts.
Image source: Construction Machinery Bulletin
A similar scene appeared in 2013. In June 2013, Construction Machinery raised 523 million yuan from the controlling shareholder Construction Machinery Group, and after deducting the issuance cost of 9.12 million yuan, 370 million yuan was used to repay the loan and 144 million yuan was used to supplement the working capital.
In addition, the reporter noted that construction machinery is also a relatively large number of Shaanxi stock fund-raising enterprises.
According to rough statistics, since its listing in 2004, Construction Machinery has completed 4 private placements (excluding initial listing fundraising) and 2 corporate bonds, with a total investment amount of more than 5 billion yuan.
Specifically, in addition to the initial offering and the above-mentioned 523 million yuan raised in 2013, in 2015, construction machinery completed the merger and reorganization of two private enterprises, Shanghai Pangyuan Machinery Leasing Co., Ltd. and Zigong Tiancheng Construction Machinery Co., Ltd., at a high price of 1.905 billion yuan in half a year, and raised 635 million yuan of supporting funds for capital increase and integration of the target, in order to absorb high-quality resources and enhance their own profitability.
In 2020, Construction Machinery completed a fixed increase plan of 1.506 billion yuan, and the funds were used for the expansion and construction project of engineering leasing equipment, and in October 2021 and the end of March 2022, Construction Machinery successfully issued two corporate bonds with a scale of 500 million yuan.
Image source: Construction Machinery Official WeChat
It is worth noting that in 2020, Construction Machinery planned to issue corporate bonds with a scale of no more than 2 billion yuan (including 2 billion yuan), which was intended to be used to repay the company's interest-bearing debts, supplement the company's liquidity and other purposes permitted by laws and regulations.
In 2022, the convertible bond plan will be changed to a proposed public issuance of corporate bonds with a scale of no more than 1.9 billion yuan (including 1.9 billion yuan), and the net proceeds after deducting the issuance costs will be used for leasing equipment purchase projects and replenishing liquidity.
However, in June this year, the above-mentioned convertible bond scheme was terminated.
The net loss was 351 million yuan
It is not difficult to find from the financing process since the listing that construction machinery is relatively short of money.
The announcement of elongated construction machinery found that it disclosed a large number of external guarantee announcements, and rough statistics show that from the beginning of 2022 to the present, construction machinery has disclosed a total of 31 guarantee announcements.
At the same time, judging from the liabilities disclosed by it, as of September 30, 2023, the total liabilities of construction machinery were 12.411 billion yuan, of which the current liabilities were 5.960 billion yuan, and the current liabilities accounted for a relatively high proportion of the total liabilities, and at the end of 2021, 2022 and September 2023, the company's asset-liability ratio was 65.35%, 66.60% and 68.69% respectively.
"The project cycle of engineering infrastructure and real estate is relatively long, and the settlement must be lagging behind after the project is completed, so the debt is relatively high. And in the short term, the industry should not be too significantly improved. The staff of the Secretary of the Board of Directors of Construction Machinery told reporters.
Companies with debt repayment pressure generally have the problem of insufficient sustained profitability, and construction machinery is no exception. In 2022, construction machinery will achieve an operating income of 3.896 billion yuan, a year-on-year decrease of 17.56%, and a net loss of 42.2052 million yuan, a year-on-year decrease of 111.27%.
Entering 2023, its losses have further intensified.
In the first three quarters of 2023, the revenue of construction machinery was about 2.438 billion yuan, a year-on-year decrease of 15.01%, and the net profit loss attributable to shareholders of listed companies was about 351 million yuan, a year-on-year decrease of 662.72%.
For the reasons for the loss, the construction machinery previously mentioned in the semi-annual report that due to the reduction in the new construction area of the real estate industry, the number of new orders signed by the company is difficult to grow, and a large number of signed projects, due to project reasons, the equipment can not enter the site on schedule, which also affects the improvement of equipment utilization.
In addition, the reporter noted that the construction machinery was implemented 8 times in 5 years of regulatory measures or penalties, involving the reasons for inflating performance and raising funds not being used in accordance with the regulations.
For example, in November 2023, part of the funds raised from the corporate bonds issued by Construction Machinery were not used according to the purpose decided, which violated Article 13 of the Administrative Measures for the Issuance and Trading of Corporate Bonds. The Shaanxi Supervision Bureau of the China Securities Regulatory Commission issued a warning letter to the company and Bai Haihong.
On November 11, 2020, the Shaanxi Supervision Bureau of the China Securities Regulatory Commission issued the "Decision on Issuing Warning Letters to Shaanxi Construction Machinery Co., Ltd., Yang Hongjun, Chai Zhaoyi, and Bai Haihong".
The reason is that the cost and expense of construction machinery from 2015 to 2017 were undercounted by 18.2966 million yuan, resulting in an overstatement of 18.2966 million yuan in total profit, and in 2018, the cost and expenses were overcounted by 12.1616 million yuan, resulting in an undercount of 12.1616 million yuan in total profit.
Image source: Construction Machinery Bulletin
Looking further, on July 11, 2018, Construction Machinery received 4 fines from the Shaanxi Securities Regulatory Bureau, for its 2015 issuance of shares to purchase Tiancheng Machinery, the acquisition of the target Tiancheng Machinery from 2015 to 2017 The net profit realized was less than 50% of the predicted amount.
Although the operating performance is not good, the construction machinery released the "dividend return plan for the next three years" on the same day as the fixed increase announcement. It stated that under the premise of not affecting the company's ability to continue operations, the cumulative profit distributed in cash in the three years from 2023 to 2025 shall not be less than 30% of the average annual distributable profit realized in the last three years.
"The company must do this kind of dividend return, once the conditions are met, the company will still actively perform its duties. The above-mentioned staff member told reporters.
National Business Daily