The new shipbuilding cycle starts, and Chinese ships lead the world

The company's capital in hand is relatively sufficient, and after the company completes the asset restructuring in 2020, the monetary capital strength has further increased, maintaining at more than 50 billion yuan. The company's overall operating cash flow began to show a net inflow in 2017, and the company's operating cash flow in the first three quarters of 2022 was -4.78 billion yuan. The collection of ship products of the main subsidiary companies decreased year-on-year, and the decrease of material equipment expenditure was less than the decrease of collection.

1.3. Leading enterprise of military and civilian ship manufacturing, four subordinate shipbuilding companies

The shipbuilding industry has strong cyclical attributes, and the company's overall performance is also strongly related to the overall situation of the last round of shipbuilding cycle. After more than 20 years of upward and downward stages in the shipbuilding industry, we review the company's development history in detail here. 1) The company was formerly known as Hudong Heavy Machinery. After listing, the company continued to invest in research and development, expand production and share reform, etc. In 2005, it established a joint venture diesel subsidiary with CSSC and Mitsui Shipbuilding and introduced advanced diesel engine manufacturing technology and management mode. In 2006, in order to build a modern ship industry chain system, the holding shares of the company were transferred to CSSC free of charge. After the completion of equity transfer, CSSC directly held 53.27% of the shares of Hudong Heavy Machinery, which greatly improved the status of Hudong Heavy Machinery in CSSC.

2) In 2007, with the great recovery of the shipping industry cycle, the company seized the opportunity to acquire Waigaoqiao Shipbuilding, CSSC Chengxi, Yuanhang Wenchong and other private shipping enterprises through private placement, and changed its name to "China State Shipbuilding Industry Corporation Limited". Through the first major asset reorganization, the industrial chain framework of "shipbuilding, ship repair and supporting" of the civilian products business has been built, and it has become a listing platform for the core civilian products main business of CSSC.

3) In 2012, the company began to be affected by the downward cycle of the shipbuilding industry. From 2013 to 2018, the company successively transferred the shares of Changxing Shipbuilding, Guangzhou Firewood Ship, Guangxi Sea Ship, Wenchong Shipyard, Changxing Heavy Industry and other companies, focusing on the advantageous areas and optimizing the allocation of resources. In 2016-2017, affected by the downturn in international trade, the company's continuous losses triggered the delisting risk warning, and in 2018, the delisting warning was revoked by reducing costs and increasing efficiency and implementing market-oriented debt-to-equity swaps.

4) In 2019, China State Shipbuilding Corporation injected military and civilian assets such as Jiangnan Shipbuilding and Guangzhou Shipbuilding International into the company, realizing the transformation of the civil ship business into an integrated military-civilian ship final assembly platform. In the same year, The State Council approved the joint restructuring of China State Shipbuilding Industry Group and China Shipbuilding Industry Group to establish China State Shipbuilding Group, which indirectly controlled 50.42% of the shares of China State Shipbuilding after the completion of the acquisition.

5) In 2020, CSSC will jointly establish CSSC Power Group with 100% equity of CSSC Power, 51% equity of CSSC Power Research Institute, 15% equity of CSSC Mitsui, and 100% equity of Hudong Heavy Machinery. In 2022, the third major asset restructuring will be carried out, and the controlling shares of CSSC will be transferred. After the completion of the transaction, CSSC will change from holding to participating shares, holding 31.63% of the shares. Since then, the company has set up the power business and positioned the domestic head ship assembly platform.

The company's four major shipyards have their own focus, and the subsidiaries cover the complete shipbuilding industry chain. Jiangnan Shipbuilding is mainly engaged in military ship construction, super large container ships, LNG ships, special ships, etc. Waigaoqiao shipbuilding mainly focuses on the construction of civil ship products (bulk carriers, container ships and large tankers), large cruise ships and offshore platforms. CSSC and CSSC Chengxi are mainly engaged in ship repair and modification and electromechanical business, in addition, CSSC is also engaged in the construction of military auxiliary ships and special ship types.

1) Jiangnan Shipbuilding: a national key large-scale modern shipbuilding enterprise, its predecessor was the Jiangnan Machinery Manufacturing General Administration founded in 1865 in the Qing Dynasty. In recent years, Jiangnan Shipbuilding has developed, designed and built more than 40 types of ships in 12 categories, such as multi-type national strategic high-tech products, official scientific research vessels, liquefied gas vessels, container ships, car ro-ro ships, chemical vessels, etc. Jiangnan Shipbuilding is the only shipbuilding company in China with a full range of research and development, design and construction capabilities of liquefied gas vessels, with more than 20 types of independent intellectual property rights of high value-added vessels represented by Jiangnan liquefied gas vessels, container ships, Panamax bulk carriers and chemical carriers. The company has sufficient orders, and at present, there are multi-type national defense strategic high-tech products, cutting-edge scientific research vessels, liquefied gas vessels, container ships and other high-tech and high value-added products under construction.