M&A Analysis and Research Report on Ship-building Industry of China

•  The status quo of shipping manufacturing industry in China

The world ship manufacturing bases was shifting towards Japan from Western Europe in 1950s then spearheading to Korean by 1970s. It took only 10 years for Japan to become the top ship manufacturing nation around the world while 9 years for Korean to be second over America and European nations. China remains at the third place from 1995. The national Development and Reform Commission has recommended that China be the first ship manufacturing industry worldwide while engage the transformation of across-the-board into new industrial model by harnessing the potential from governmental preferential treatment in taxation and financial seeking policies. It is supposed to be group-oriented for intensified development in three harbours such as Bohai Bay , Yangtze River Estuary and Pearl River Estuary. The Commission of Science Technology and Industry For National Defense has set the goal to sharpen the edge of Chese Shipping industry to catch up with Japan and Korean in their current level with 10 to 15 years while the gross tonnage of 10million in 2005 is expected up to be 24million in 2015 by expanding the market share from 16% to 35%, which labels China the number one worldwide.

There is a fast development in China as the world economy looks up in resent years indicating a power house for leapfrogging increase in marine freight around the globe. The domestic and international shipping business remains brisk. It is anticipated that the domestic freight demand will be 31 million tons and 6.2million tons of freight per year and a common goal for China shipping industry to be the top one in this sector with the golden opportunity given in the first 20 years this century. Taking two superstars in shipbuilding industry for example, CSSC proposes to bring 9million tonnage at current level up to 10million as to stand at the third place on the world stage. The other is CSIC that is looking for 10million of tonnage by 2010.

2. The driving forces behind M&A in shipbuilding industry in China

There is unprecedented growth in shipbuilding industry in each passing year, which makes the M&A in this sector got on the headline. There are strong records left by accelerated phase of M&A procedures in ship manufacturing industry.

Shining example of M&A in shipping manufacturing industry

Time

Both parties involved in M&A

Content of M&A

Aug.2006

Jianlong Steel buying Yangfan Group Co., Ltd.

Jianlong Steel provides opportunity for Yangfan Group Co., Ltd. having merged by absorbing the state-owned stakes. In Agreement, Yangfan Group Co., Ltd. keeps its name and brand after Jianlong Steel takes over it.

July,2006

Tsnghua Tongfang buying Xinjiang Shipping Building Plant

As first step into shipping manufacturing industry, Tsnghua Tongfang devoted to the establishment of Tongfang Xinjiang Shipping Building Co., Ltd after the taking-over of Xinjiang Shipping Building Plant in Hu Kou County. In addition to the building of small-size ship under million tonage with high-added value, Tongfang Xinjiang Shipping Building Co., Ltd is planning to put two more dockyards by 2007 to boost productivity at 6 to 8 million ton with 1.2 tonage ship which is readily mraketable and generating RMB 0.6 to 0.8 billion.

Jan.2006

Aker buying Alstom

Norwegian Aker's take-over Atlantic Ship Building Manufactures of French Alstom drew 0.35billion and 50 million Euros from Alstom and Aker respectively. The new-born management firm was established with 25% and 75% of stakes from each side engaging in shipping building business from Atlantic Shipping Building Plant of Natrium SA de Saint and Lerous Naval, a small dockyard in Lorient SB.

May,2005

Hyundai Corporation co-funded shipping building firm with Lingshan Ship Engineering Co., Ltd

Hyundai Corporation co-funded shipping building firm with Lingshan Ship Engineering Co., Ltd. USD 7.4million was chipped in Qingdao Modern Ship Building Co., Ltd and holding 51% of its stake.

Aug.2005

Bohai Ship Mechanical Engineering Co., Ltd buying Jinzhou Special Welding Equipment Factory

Bohai Ship Mechanical Engineering Co., Ltd is affiliated to Huludao Bohai Ship Mechanical Engineering Co., Ltd which devoted RMB 29 million to buy Jinzhou Special Welding Equipment Factory. This is touted to be the best combination thanks to shipping building industry being the biggest customer for welding materials, which bring a legendary turnaround to a guru.

March,2005

General Dynamocs buying Newport News SB.

General Dynamics as the fourth defence mechanical contractor in America , bought Newport News SB. With USD2.1 billion and became the exclusive manufacture in carriers and submarine for American Navy.

2004

Northrop Grumman buying Litton

Northrop Grumman committed USD 0.38 billion buying Litton, a ship building manufacturing firm,

2002

Netherlands Damen Shipyards Group buying Changde Ship Building Plant

In 2002, Damen Shipyards Group of Holland brought Changde Ship Building Plant as to establish Changde-Damen Shipping Building Co., Ltd focusing on converting machine of gas-rotary tow ship and digger dredger.

Sep.2001

STX buying Dadong Ship Building

STX engaging in medium-size diesel engine and ship building brought Dadong Ship Building cooperation that is on the seventh place in Korean.

The seasons given by us analyses behind the M&A in Chinese ship building industry as followed:

•  Low labour cost is the major reason for absorbing foreign investment or putting plants in Chinese market.

B. Rosy picture in Chinese market. According the statistics from Clarkson towards world shipbuilding industry, based on shipping capacity, ship building number, order of carrying on new ships and order book share 17%, 23% and 18% respectively on world stage. Order book in china has been running over Japan to be the second place.

C. Shipbuilding industry charms private venture capital. Private sector that is planning to stake out new territory on a profitable position casts a reality where ship manufacturing industry feels short in business.

3. Tendency analysis in M&A of ship building industry in China

The M&A in ship building industry in the future can be characterized upon the analyses of us as followed:

A. M&A will deepen further into the industrial chain. Industrial-chain oriented M&A can amplify the business horizon on one hand to move supply and marketing smoothly while hold down the overall cost as to stir competitiveness. One example is the joint-venture firm committed by CSIC, W?RTSIL? and MHI targeting at the production in diesel engine for large-size low speed ship.

B. Foreign participation in domestic ship building. Many ship building companies in Japan and Korean such as Daewoo, Samsung, Hyundai and MHI have planned or ran and up joint ventures in China .

C. mixed ventures by non-insiders. Host of private capital are vying for taking over ship manufacturing companies as they witness a promising fortune and potential to be taken in this sector.

D. M&A brought about by revamping in military-related industry. Dachuan Shipbuilding, Southern Ship Building Plant, Bohai Shipbuilding Heavy Industry, Hudong-Zhonghua Shipbuilding (Group) and 4810 Plant was cracked up to be the cradle of Chinese navy. The state will bring out a whole spectrum of policies for scaled development in military-related ship manufacturing companies when spearheading to ^Blue Water ̄Navy era.

E. M&A based on group operation strategy. Hudong Heavy Machinery Co.,Ltd issued less than 0.4 billion stocks towards CSSC with acquisition value worth of RMB 0.9billion while raising up RMB 3 billion of fund. Among others, CSSC pledged to more than 59% of total issuance over its take-over, Baosteel and Shanghai Electric at 16%, and Chinalife , China Marine Finance, Baosteel, CITIC will buy in cash. After the take-over, the new listed company will hold 100% of stock of Shanghai Waigaoqiao Shipbuilding Co., Ltd and Chengxi ShipYard Co., Ltd, 54% of CSSC Shipyard ( Guangzhou ) as to be listed on the stock market as liable asset.

 Chapter 1  Research Overview 
Section 1   Background of the research
Section 2   Contents of the research
Section 3   Method over the research
Section 4   Team for the research
Section 5   Conclusion for research


Chapter 2  The status quo of Ship Building Industry on World Stage  
Section 1   The characteristics of ship manufacturing industry worldwide
Section 2   The overall structure of ship manufacturing industry worldwide
1. The productive structure analysis of ship manufacturing industry worldwide 
2. The analysis over ship manufacturing market worldwide
3. The market tendency analysis of ship manufacturing industry worldwide
Section 3    The analysis of competitive culture among ship manufacturing industry worldwide
1.  Deep analysis of competitiveness in ship manufacturing industry worldwide
2.  The analysis of regional competition within ship manufacturing industry worldwide
2.1 Europe
2.2 North America
2.3 Asia
3.  The analysis of competitive culture in this sector worldwide


Chapter 3   The analysis of Current Ship Building Industry in China  
Section 1 the status quo of ship building industry in China
Section 2 the market analysis of ship building industry in China
1. Overview of total supply between 2007 and 2008  
1.1 Regional arrangement of ship building industry    
1.2 The centrality of ship building industry  
2.  Demand scale between 2007 and 2008
2.1   The anatomy of market scale and demand in ship building industry of China
2.2 Demand tendency analysis of ship building industry of China
Section 3   The inside look into Supply and demand in ship building industry of China
Section 4 the export and import analysis of ship building industry in China
3.1  Import analysis
3.2  Export analysis


Chapter 4   The market analysis over Ship Building Industry of China in detail
  Section 1   Container cargo
  1.  Analysis over industry across-the-board and its character
  2.  Market scale between 2007 and 2008
   Section 2   Bulk Cargo Ship
  1.  Analysis over industry across-the-board and its character
2.  Market scale between 2007 and 2008
    Section 3   Oil tanker
   1.  Analysis over industry across-the-board and its character
   2.  Market scale between 2007 and 2008
    Section 4    Tourist Boat
   1.  Analysis over industry across-the-board and its character
   2.  Market scale between 2007 and 2008
   Section 5   Cargo for liquid gas and chemicals
     1.  Analysis over industry across-the-board and its character
     2.  Market scale between 2007 and 2008
   Section 6   Refrigerator cargo 
     1.  Overview on the industry and its character
2.  Market scale between 2007 and 2008


Chapter 5  Analysis of investing policy environment in ship building industry of China.
Section 1   Impact towards ship building industry from macro-economic policy
Section 2   Impact towards ship building industry from industrial policy

Chapter 6   Factor-oriented analyses over impact on development of ship building industry 
Section 1  Risks on development on ship building industry of China
1.  World Politics a and economy
2.  Steel supply
3.  Manufacturing know-hows
4.  Human resources
Section  2   Potential risks for ship building industry of China

Chapter 7The anatomy of status quo and competitive culture within ship building industry in China
Section  1  Bohai Bay
1. Analysis of ship demand between 2007 and 2010
2. Analysis of characters over industrial development and structure in regional ship 
building industry
3. Regional competition and major players of ship building industry in localities
4. M&A tendency and feasibility analysis in regional ship building industry
Section  2  Shanghai
 1. Analysis of ship demand between 2007 and 2010
2.  Analysis of characters over industrial development and structure in regional ship 
building industry
 3.  Regional competition and major players of ship building industry in localities
4.  M&A tendency and feasibility analysis in regional ship building industry
Section  3  Yangtze River 
1.  Analysis of ship demand between 2007 and 2010
2.  Analysis of characters over industrial development and structure in regional ship
 building industry
3.  Regional competition and major players of ship building industry in localities
4.  M&A tendency and feasibility analysis in regional ship building industry
Section 4   Guangzhou
1. Analysis of ship demand between 2007 and 2010
2. Analysis of characters over industrial development and structure in regional ship 
building industry
3. Regional competition and major players of ship building industry in localities
4. M&A tendency and feasibility analysis in regional ship building industry
Section 5  Fujian
1. Analysis of ship demand between 2007 and 2010
2. Analysis of characters over industrial development and structure in regional ship 
building industry
3. Regional competition and major players of ship building industry in localities
4. M&A tendency and feasibility analysis in regional ship building industry
Section 6  Other regions 
1. Analysis of ship demand between 2007 and 2010
2. Analysis of characters over industrial development and structure in regional ship
 building industry
3. Regional competition and major players of ship building industry in localities
4. M&A tendency and feasibility analysis in regional ship building industry

Chapter 8  The status quo of M&A in China
Section 1  Background analysis in M&A of China¨s ship building industry
Section 2  Analysis of status quo in M&A in China¨s ship building industry
Section 3  Case analysis in M&A in China¨s ship building industry
Section 4  Tendency analysis in M&A in China¨s ship building industry

Chapter 9  Potential blocks in China¨s ship building industry
Section 1   From policy side
Section 2   From capital side
Section 3  From equipment point of view
Section 4   Engineering hurdles

Chapter 10  Cases analysis in M&A in foreign counterparts  
Section 1  Akerbuying Alstom
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures 
3.  Developmental strategy for post M&A stage
Section 2  General Dynamics buying Newport News SB.
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage
Section 3  STX buying Dadong Ship Building
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage

Chapter 11  M&A trend analysis for foreign ship building manufacturers buying in China
Section 1  Industry prospect in ship building companies home and abroad
1. Character in investment
2. Investment targets
3. Market performance
4.  Products mix in investment
5.  Investment tendency
Section 2   DSME
1. The status quo of investment by DSME
2. Core competitiveness of DSME
3.  M&A tendency and feasibility analysis of DSME
Section 3  Samsung Heavy Industries Co.
	1. The status quo of investment by Samsung Heavy Industries Co.
2. Core competitiveness of Samsung Heavy Industries Co.
3.  M&A tendency and feasibility analysis of Samsung Heavy Industries Co.
Section 4 Hyundai Group
	1. The status quo of investment by Hyundai Group
2. Core competitiveness of Hyundai Group
3. M&A tendency and feasibility analysis of Hyundai Group
Section 5  MHI
1. The status quo of investment by MHI 	
2. Core competitiveness of MHI
3. M&A tendency and feasibility analysis of MHI
Section 6  Hitachi Shipbuilding & Engineering Co., Ltd 
1. The status quo of investment by Hitachi Shipbuilding & Engineering Co., Ltd
2. Core competitiveness of Hitachi Shipbuilding & Engineering Co., Ltd
3. M&A tendency and feasibility analysis of Hitachi Shipbuilding & Engineering   Co., Ltd
Section 7  Oshima Shipbuilding Plant
1. The status quo of investment by Oshima Shipbuilding Co., Ltd	
2. Core competitiveness of Oshima Shipbuilding Co., Ltd
3. M&A tendency and feasibility analysis of Oshima Shipbuilding Co., Ltd

Chapter 12  Case study in M&A in domestic ship building industry  
Section 1  Jianlong Steel buying Yangfan Group Co., Ltd. 
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage
Section 2  Tsnghua Tongfang buying Xinjiang Shipping Building Plant
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage
Section 3  Hyundai Corporation co-funded shipping building firm with Lingshan 
Ship Engineering Co., Ltd
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage
Section 4  Bohai Ship Mechanical Engineering Co., Ltd buying Jinzhou Special 
Welding Equipment Factory
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage
Section 5  Netherlands Damen Shipyards Group buying Changde Ship Building Plant
1.  Background for M&A and core values
2.  Solution analysis for M&A procedures
3.  Developmental strategy for post M&A stage

Chapter 13   Analysis of M&A and core competitiveness in ship building industry of China
Section 1  CSSC
1. Profile of the Group
2. Analysis of its blockbuster
3. Analysis of its core competitiveness
4. Analysis of its technological back-up and productive capability
5. Analysis of long-term strategy
6. Analysis of M&A trend and actionability
Section 1  CSIC
1. Profile of the Group
2. Analysis of its blockbuster
3. Analysis of its core competitiveness
4. Analysis of its technological back-up and productive capability
5. Analysis of long-term strategy
6. Analysis of M&A trend and actionability

Chapter 14  Analysis of industrial chain and M&A trend in ship building industry of China
Section 1  Analysis of character over industrial chain 
Section 1  Analysis of industrial chain and possibility in M&A 

Chapter 15  Analysis of industrial chain and possibility in M&A
Section 1  Analysis of possibility in M&A over large-scale corporations
1. CSSC
1.1 Analysis on strategic development 
1.2 Analysis of bottleneck over corporation development
1.3 Analysis of M&A possibility
2. CSIC
2.1 Analysis on strategic development
2.2 Analysis of bottleneck over corporation development
2.3 Analysis of M&A possibility
Section 2  Analysis of M&A possibility in medium-small size corporation
1. Shandong Huanghai Shipbuilding Co., Ltd
1.1 Analysis of M&A possibility
1.2 Value analysis of M&A
2. Yangfan Group Co., Ltd. in Zhejiang Province
2.1 Analysis of M&A possibility
2.2 Value analysis of M&A
3. New Century Shipbuilding Co., Ltd
3.1 Analysis of M&A possibility
3.2 Value analysis of M&A
4. Huadong Shipbuilding Co., Ltd in Zhejiang province
4.1 Analysis of M&A possibility
4.2 Value analysis of M&A 
5. Weihua Shipbuilding Co., Ltd
5.1 Analysis of M&A possibility
5.2 Value analysis of M&A
6. Yuexin Shipbuilding Co., Ltd in Panyu District, Guangzhou City 
6.1 Analysis of M&A possibility
6.2 Value analysis of M&A
7. Zhejiang Shipbuilding Co., Ltd 
7.1 Analysis of M&A possibility
7.2 Value analysis of M&A

Chapter 16  Risk analysis over M&A in ship building industry
Section 1  Management risks
Section 2  Financial risks
Section 3  Technological risks
Section 4  Production risks

Chapter 17  The recommendation for M&A in ship building industry of China

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