SMM9 March 17: September 16, Chongqing Iron and Steel issued a "suggestive announcement on the change of shareholders' rights and interests and the change of the actual controller", which shows that the actual controller of the company has been changed from Siyuan he Equity Investment Management Co., Ltd. to China Baowu Iron and Steel Group Co., Ltd. This equity change is the transfer of the partnership rights and interests of the Siyuan he Industrial Development Fund to Desheng Group by Siyuan he Investment, the former actual controller of the company. at the same time, the Siyuan he Industrial Development Fund was dissolved and 75% of the equity of Longevity Steel was distributed non-cash to China Baowu and Desheng Group in proportion to the actual contribution. Baowu of China acquired 40% equity of Longevity Steel and reached an action agreement with Zhanxin Fund to obtain the control of Longevity Steel. As a result, 2096981600 shares of the company are indirectly controlled, accounting for 23.51% of the total share capital of the company. Baowu of China has become the actual controller of the company.

Affected by factors such as overcapacity in the steel industry, Chongqing Iron and Steel has lost money for two consecutive years, with an asset-liability ratio as high as 103%. In 2017, Chongqing Iron and Steel entered the bankruptcy reorganization process. Longevity Iron and Steel, jointly established by Siyuan he Fund and Chongqing War New Fund, participated in the reorganization of Chongqing Iron and Steel. In December 2019, Siyuan he Investment, the actual controller of Chongqing Iron and Steel Division, signed a "letter of intent" with Baowu Group. Baowu Group intends to become the actual controller of the company. in the first half of this year, the management of Chongqing Iron and Steel was greatly changed. Baowu senior executives moved in, and recently, Baowu became the actual controller of the company and officially settled in Baowu Department on behalf of Chongqing Iron and Steel.

In recent years, China's iron and steel industry continues to carry out industrial integration. Taking Baowu of China as an example, Bayi Iron and Steel, TISCO stainless Steel, Maanshan Iron and Steel Co., Chongqing Iron and Steel and other local steel enterprises have joined the "Baowu system". In 2019, China's Baowu achieved steel output of 95.46 million tons, total revenue of 552.2 billion yuan and total profit of 34.53 billion yuan, ranking first in the world in terms of operation scale and profit level. China's Baowu strategic plan clearly puts forward that we should strive to build "100 million tons of Baowu" with the vision of "becoming a leader in the global steel industry".

Huaan Securities believes that at present, the concentration of China's iron and steel industry is still on the low side. According to the output measurement in the first half of 2020, the CR10 of China's iron and steel industry is only 36.6%. Compared with Japan and the United States, where the industry concentration is more reasonable, there is still a large gap. Baowu's series of acquisitions and restructuring will help to enhance the concentration of China's iron and steel industry, cultivate Baowu's international competitiveness, and become a world-class iron and steel enterprise.

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