Three-ring reorganization Xiangyang bearing Hubei casting automotive parts "aircraft carrier"
After several provocations, "Xinyang Bearing" finally found its way forward. On May 27, Fuyang Bearing publicly announced that it had received approval from the Hubei Provincial People's Government on May 26, 2009, regarding the transfer of 95% of the state-owned shares in Liyang Automotive Bearing Group Co., Ltd. The shares were transferred to Sanhuan Group by Xiangfan City's SASAC, making Shenyang Automotive Bearing Group Co., Ltd. a subsidiary of Sanhuan Group.
According to available information, Sanhuan Group is controlled by the Hubei Provincial SASAC and focuses on the production and operation of special vehicles, military vehicles, auto parts, and CNC forging presses. In 2008, the group's total assets reached 8.3 billion yuan.
The reorganization agreement between Sanhuan Group and Shenyang Automotive Bearing Group Co., Ltd. stipulates that the Xiangfan City People’s Government agrees to transfer the 95% equity interest in Yanzhou Group to Sanhuan Group without compensation. Additionally, Sanhuan must invest no less than RMB 300 million in Yanzhou Group within the next two years, or the deal will be terminated.
Liao Yonggao, a representative of the company, expressed uncertainty about how exactly the RMB 300 million would be invested. However, the vision of Hubei Province is clear: to build an "aircraft carrier" in the auto parts industry.
On February 17 this year, Hubei Provincial Governor Li Hongzhong visited Sanhuan Group and urged the company to create an "aircraft carrier" for the auto parts industry in Hubei. Sanhuan Group has already established itself as a key player, providing auto parts to at least 10 major Chinese automakers. Continuing to focus on traditional projects like auto parts has become a strategic priority for the group.
Two months after the governor's visit, the Hubei State-owned Assets Supervision and Administration Commission quickly moved forward with transferring the stake in Yanzhou Group to Sanhuan Group.
Once Yanzhou Group was merged into Sanhuan Group, the initial plan was to expand and strengthen the main business of Xiangyang Bearing, which specializes in car bearings. However, since Sanhuan Group currently has no related assets, there are no immediate plans for asset injection.
He Yixin, director of the controlling listed company of Sanhuan Group (000883.SZ), stated that the acquisition would not affect the development of the three-ring shares. He emphasized that the most urgent task after the merger is to improve the performance of Xiangyang Bearing.
Xiangyang Bearing used to be the fourth-largest bearing factory in China, but that was over a decade ago. Today, the domestic market for bearings is worth 100 billion yuan, yet Xiangyang Bearing only accounts for around 5 billion yuan, indicating a low market share.
This view was supported by Chairman Shu Jian, who said that Sanhuan Group aims to complete the operation of Yanzhou Group and position itself as an "aircraft carrier" for Hubei's special vehicle and auto parts industry. This move, he added, would bring better development opportunities.
Sanhuan Group has set ambitious goals, aiming to exceed 10 billion yuan in output value by the end of the "Eleventh Five-Year Plan" and 20 billion yuan by the end of the "Twelfth Five-Year Plan." The reorganization of the Three-ring Group is seen as a crucial step toward building an industrial "aircraft carrier" in Hubei.
Shu Jian also pointed out that the reorganization of Sanhuan and Yanzhou Groups, both specializing in auto parts, will generate significant synergies, allowing them to benefit from the booming automotive industry.
Hubei Province hopes to establish Sanhuan Group as a leading force in the special vehicle and auto parts sectors. Moreover, the acquisition of Yanzhou Group aligns with the Three-ring Group's strategy to adjust its product structure. According to Shu Jian, the current acquisition involves only the group company and does not affect the shares of the listed companies under the Three-ring Group.
Sources close to Sanhuan Group revealed that the group has two listed companies and may reorient both. Xiangyang Bearing is likely to be positioned as an auto parts company, while Sanhuan Group could focus more on the vehicle sector.
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