Global shipbuilding leader, benefit from the industry cycle recovery

(2) Rise (2006-2012) : The company became a listing platform for the core civilian products of China Shipbuilding Group. From 2006 to 2012, the compound annual growth rate of operating income was 48.4%. In 2008, the company's net profit reached the highest level in history of 4.16 billion yuan, +42.6% year-on-year.

(3) The trough (2012-2017) : At the bottom of the shipbuilding industry cycle, the transfer of shares of Changxing Shipbuilding, Guangshu Wenchong and other companies to streamline business. From 2012 to 2017, the compound annual growth rate of the company's operating income was -7.2%.

(4) Building the bottom (2017-2021) : debt-equity conversion into military and civilian assets, and the merger of North and South ships to create an "aircraft carrier" in the shipbuilding industry. From 2017 to 2021, the compound annual growth rate of operating revenue is 37.5%.

1.2.1. Beginning (1998-2006) : Formerly Hudong Heavy Machinery, it is a diesel engine manufacturing company with outstanding strength under CSSC

The company was formerly established in 1998 Hudong heavy machinery, main Marine diesel engine. CSSC was formerly known as Hudong Heavy Machinery Co., LTD. Hudong Heavy Machinery Co., Ltd. was established in 1998, and was jointly initiated by Hudong Shipyard (now Hudong Zhonghua Shipbuilding Group Co., LTD.) and Shanghai Shipyard (now Shanghai Shipyard Shipbuilding Co., LTD.), and was listed on May 20, 1998. The main product of Hudong Heavy Machinery is Marine diesel engine, Marine diesel engine is the main power equipment of civil ships, small and medium-sized ships and conventional submarines. The low speed diesel engine can drive the propeller directly, and the low speed makes the propeller have high propulsion efficiency. Hudong Heavy Machinery diesel engine in 1999 market share of more than 50%, sales and income ranked first in the domestic industry, the main customers are the company's two major shareholders Hudong Shipyard and Shanghai shipyard.

After listing, the investment in research and development and expansion of production was increased, and the diesel engine business developed rapidly, and the market share reached 65%. In 2000, Hudong Heavy Machinery medium and low speed diesel engine domestic market share reached 65%, completed 62 units / 957,000 horsepower in 2004, the output ranked fifth in the world, in 2005 diesel engine annual output exceeded 1 million horsepower, net profit exceeded 100 million yuan. With the continuous development of the international shipping industry and shipbuilding industry, the company sold 79 diesel engines in 2006, with a total of 1.08 million horsepower, and the main business income exceeded 2.2 billion. The company continues to increase investment in research and development, and promote the research and development of 70 million watt large-diameter diesel engines and LNG dual-fuel diesel engines. While developing the main business, the company also actively carries out investment expansion, share reform and other work, which has strategic significance for the future development of the company.

In 2005, Hudong Heavy Machinery and CSSC, Mitsui Shipbuilding joint venture to build a diesel engine subsidiary, the introduction of advanced diesel engine manufacturing technology. Due to the rapid development of shipbuilding industry, it is urgent to improve the manufacturing capacity of Marine diesel engine simultaneously. In order to expand production capacity, maintain the market share of diesel engines, and solve the problem of limited production area, in July 2005, China State Shipbuilding Corporation (CSSC) and Japan's Mitsui Shipbuilding Co., LTD. (Mitsui Shipbuilding) decided to invest in high-power Marine diesel engine projects. The joint venture period of 30 years, the registered capital of 480 million yuan, CSSC Group contributed 15%, Hudong Heavy machinery contributed 51%, Mitsui Shipbuilding contributed 34%, invested in the establishment of a subsidiary Shanghai Mitsui Shipbuilding Diesel Engine Co., LTD. Mitsui Shipbuilding Co., Ltd. was founded in 1917 and is one of the largest shipbuilding companies in Japan. Mitsui Shipbuilding has mature and advanced diesel engine manufacturing technology. In 1976, the cumulative production of B&W diesel internal combustion engine products reached 10 million horsepower. In 1992, the most advanced diesel internal combustion engine assembly plant was built. The cooperation between the company and Mitsui Shipbuilding has not only promoted the economic and technological exchanges between China and Japan, but also accelerated the introduction of advanced diesel engine manufacturing technology and company management methods by Hudong Heavy.

In 2005, Hudong Heavy Machinery carried out the reform of non-tradable shares, which accelerated the marketization process. At the beginning of the establishment of China's stock market, in order to ensure that the state has control over listed enterprises, and to prevent the newly established stock market from being unable to bear the pressure brought by the full circulation of the market, the system of split shares was established. But the split share structure has also created the problem of different rights and interests of the same share, which has seriously affected the healthy development of China's stock market. With the development of economy and the capital demand of enterprises, it is necessary to eliminate the institutional differences through the reform of non-tradable shares. Shareholders of non-tradable shares must pay a certain consideration to shareholders of tradable shares in order to obtain the circulation right. In order to increase the interests of shareholders of tradable shares, Hudong Heavy Machinery finalized the final plan in 2005 and increased the consideration. The non-tradable shareholders of the Company paid 3.2 consideration shares for every 10 shares of the tradable shareholders, and the total consideration shares paid were 24.64 million shares. Through this share reform, Hudong Heavy Machinery has effectively connected the interests of investors with the interests of the company, mobilized the enthusiasm of all shareholders to safeguard the interests of the company, and further improved the corporate governance structure. In addition, the share reform has also laid the foundation for Hudong Heavy Machinery to optimize resource allocation in the future, introduce investors, and promote industrial restructuring.