Shipbuilding industry leading enterprises, through the cycle ushered in the dawn

First, CSSC core military and civilian products main business listed company

(A) state-owned holding ship construction enterprises, continuous integration and cast industry leaders

Since its listing, it has undergone continuous integration and reorganization and become a leader in the global shipbuilding field. The company's predecessor, Hudong Heavy Machinery Co., Ltd. was jointly initiated by Hudong Shipyard and Shanghai Shipyard under China State Shipbuilding Corporation. It was registered and established in Shanghai on May 12, 1998, and listed on the Shanghai Stock Exchange on May 20 of the same year. In 2000, Hudong Heavy Machinery in the domestic Marine medium and low speed diesel engine market share reached 65%, 2004 output ranked fifth in the world, 2005 diesel engine annual output exceeded 1 million horsepower.

In 2007, the company completed the asset restructuring and changed its name to China State Shipbuilding Industry Co., LTD., the main business of shipbuilding, ship repair, machinery (core supporting) three major businesses, and became the core civilian products main business listing platform of China State Shipbuilding Group Corporation. Then, on the basis of the original business such as sharp and fine shipbuilding, the company vigorously expanded the non-ship business such as ocean engineering and mechanical and electrical equipment. According to the company's annual report, Waigaoqiao Shipbuilding delivered the 3000m deepwater drilling platform "Offshore Oil 981" in 2011, and CSSC Chengxi successfully repaired the FPSO ship; In 2015, Waigaoqiao Shipbuilding successfully named and delivered its first 18,000 TEU container ship, and undertook six construction projects of 21,000 TEU super large container ships, the largest in the world at that time, and the first domestic luxury cruise ship project. In 2018, Waigaoqiao Shipbuilding built the world's first 400,000-ton intelligent super large ore carrier and 350,000 tons offshore floating production, storage and unloading equipment, etc., constantly upgrading and optimizing the ship structure. At the same time, in order to cope with the overcapacity situation after the cold ship market in 2008, the company has transferred the shares of Changxing Shipbuilding, Wenchong Dock, Chengxi Heavy Industry and other subsidiaries and some offshore engineering orders, continued to integrate resources and focus on the main business, leading the development of Marine engineering advanced technology.

State-owned Assets Supervision and Administration Commission of the State Council is the actual controller of the company. CSSC directly holds 44.47% of the company's shares, and indirectly holds 5.95% of the company's shares through CSSC Defense and CSSC Investment, totaling 50.42% of the company's shares, and is the direct controlling shareholder of the company.

The company's subsidiaries cover the complete shipbuilding industry chain. Ship repair business includes the routine repair of all types of ships and ship conversion work; The power business is mainly the power business of high power medium and low speed diesel engine undertaken by Hudong Heavy Machinery. Marine engineering includes semi-submersible vessels, FPSO, offshore oil drilling platforms and other products; Mechanical and electrical equipment is more diversified, products such as wind tower, desulfurization tower, subway shield and so on. The company's five major businesses are coordinated and developed at the same time, which can provide customers with a full range of services.

(2) Through the trough of the global ship market cycle, diversified business ushered in the dawn of dawn

The company's performance is basically consistent with the global ship market cycle. Then the company's revenue began to decline under the background of the overall recession of the global shipping market, and in the middle of 2014-2015, the company's revenue also recovered due to the rebound of new orders in the shipping market stimulated by China's infrastructure investment. In 2019, as the ship market gradually bottomed out, the company's performance rebounded, and in 2020, the revenue of Jiangnan Shipbuilding and Guangsheng International was included in the table after the asset restructuring.

The overall gross profit margin fluctuates greatly. The company's overall sales gross margin was also significantly affected by the ship market cycle, and was relatively consistent with the power business (diesel engine) and ship building and repair, which accounted for the highest proportion of revenue before and after 2007. In terms of net profit margin, except for the unusually low gross profit margin caused by the company's provision for the liquidation of hand-held ships and the impairment loss of offshore engineering orders in 2016-2017, its change trend is basically consistent with the gross profit margin.

In terms of power business, affected by factors such as shrinking demand in the ship market, it began to decline, but it remained at a high level until 2012, when the sales price of diesel engine dropped significantly, and the gross profit margin of this part dropped to 14.54%. After bottoming out in 2014, due to the increase in the proportion of sales of medium-speed machines with relatively high gross margin, the gross margin of power business began to rebound, and it will be 18.46% in 2020.