Shanghai Electric Group Company Ltd, China's largest power equipment manufacturing group listed in Hong Kong, has quickened its pace to list on the mainland through its A-share holding company, Shanghai Power Transmission & Distribution Co Ltd.
Shanghai Electric, which owns 83.75 percent of Shanghai Power Transmission, said its proposal of issuing new A shares to merge the shares of Shanghai Power Transmission has won its shareholders' approval, according to the company's statement to the Shanghai Stock Exchange on Saturday.
The company plans to issue 616 million A shares at 4.78 yuan apiece to exchange all shares with Shanghai Power Transmission. One share in Shanghai Power Transmission can be exchanged for 7.32 shares of Shanghai Electric, according to the statement.
The proposal has been approved by the State-owned Assets Supervision and Administration Commission of the State Council and shareholders of the two companies, and is now awaiting approval from the Ministry of Commerce and the China Securities Regulatory Commission.
As per the Company Law, after getting shareholders' approval, the process of merger needs 45 days to complete.
After the share merger, all assets, debts, rights and interests of Shanghai Power Transmission will transfer to Shanghai Electric. Shanghai Electric will expand its total shares by 5 percent to 12.508 billion, of which A shares will account for 76.23 percent and H shares 23.77 percent.
Shanghai Electric's earnings per share are expected to decrease 1.5 percent to 2 percent after the share issue and merger.
"The increase of sales orders of Shanghai Electric in the coming years can ensure a continuous profit growth," said Luo Lei, an analyst at Guotai Jun'an Securities. "But the pressure of gross profit margin still exists because of the soaring prices of steel and non-ferrous metals, which are the raw materials of power equipment manufacturing."
Shanghai Electric's revenue increased 22 percent to 25.849 billion yuan and the profit jumped 50 percent to 1.76 billion yuan in the first half of this year. Earnings per share were 0.148 yuan.
(China Daily November 20, 2007)