Securities Daily reported that Jinan Steel and Laiwu Steel, the two listed companies under Shandong Steel Group both announced last evening to close share trading in order to arranging about the important asset recombination under Shandong Steel Group.

Insiders guessed that Shandong Steel Group might imitate Hebei Steel in reconstructing the subsidiary listed companies and Jinan Steel is likely to be picked out as the leader in reconstruction.

According to the released plan, Hebei Steel which owns three listed arms-Tangshan Steel, Handan Steel and Chengde Steel is to choose Tangshan Steel as the leader to merge the other listed companies and build the new Tangshan Steel into the only listed company under Hebei Steel. And, the plan already won the approval of China Securities Regulation Commission on September 21st.

Mr Zhou Xizeng analyst of CITICS said “Shandong Steel is possible to apply similar way of Hebei Steel to combine its assets, but it’s hard to say detail operations.”

In late July, Shandong Steel Group held an official meeting and definitely required its listed companies to follow the unification of personnel, financial affair, material, production, supply and marketing, which regarded as the foretell of the group’s recombination.

The material recombination picked up after Shandong Steel Group acquiring Rizhao Steel two months ago. An analyst in steel industry said “The recombination includes Rizhao Steel. It’s more possible that Jinan Steel will take charge of the recombination of absorbing the other listed companies’ assets by exchanges shares, since Jinan Steel has more powerful capacity.”

According to the data in Q3, the total assets of Jinan Steel reached as much as CNY 28.8 billion while that of Laiwu Steel posted at CNY 16.2 billion. Besides, the two mills made similar revenue in the first three quarters respectively at CNY 18.7 billion and CNY 20 billion. In addition, Jinan Steel released just several days ago to raise not more than CNY 0.65 billion by privately issuing shares at price of CNY 4.48 per tonne for its converter project and roughing mill upgrading project.

The analyst said “This private placement refers to a big amount of shares, which indicates the future position of Jinan Steel in the recombination.”

In recent time, the share market is right in the upward channel, despite the slight fall on Friday, thus Jinan Steel and Laiwu Steel share price still have a rising space. Mr Zhou said “It’s a good time for Shandong Steel Group to deal with the consolidation.”

(Sourced from Securities Daily)