Wanhua Chemical: plans to absorb and merge the controlling shareholder Wanhua Chemical with 52.2 billion yuan

Wanhua Chemical disclosed a major asset restructuring plan on the evening of May 9, and the company plans to implement an absorption merger with its controlling shareholder Wanhua Chemical by issuing shares. The book value of the net assets of Wanhua Chemical’s 100% equity is 2.111 billion yuan, and the estimated value is 52.212 billion yuan, with an estimated appreciation rate of nearly 24 times; the company is expected to issue 1.716 billion new shares at a price of 31.93 yuan per share. After the transaction, Wanhua Chemical’s chemical assets will be injected into the company as a whole. Wanhua Chemical will have a total of 2.1 million tons of MDI production capacity, making it the world’s largest MDI producer (in terms of production capacity).
　　 In 2011, after the original controlling shareholder of the listed company Wanhua Industrial acquired the BC company, the issue of potential horizontal competition between the listed company and the BC company occurred. For this reason, since the completion of the acquisition, Wanhua Industrial has signed the “Entrusted Management Agreement” with the listed company and signed the “Entrusted Management Agreement Supplement One” and “Entrusted Management Agreement” in 2014 and 2017 respectively after the expiration of the agreement. “Supplementary Agreement II” stipulates that Wanhua Industry entrusts Wanhua Chemical to operate and manage BC Company and promises to significantly improve the operating conditions of BC Company (including but not limited to the expected no normal operating losses in the next 12 months, BC The company has the conditions for sustainable operation) in the next 18 months, put forward a proposal to resolve the business merger with Wanhua Chemical in an appropriate way.
The company said that after the completion of the overall listing, BC will become a subsidiary of the listed company and will be included in the overall strategic layout of the listed company. The listed company will become the world’s largest MDI supplier and will be established in Asia, Europe and The three major markets in the Americas have established (and are preparing to build) the layout of production bases, which will also realize globalized and intercontinental production and operation, better compete with multinational industry giants, and better respond to the global chemical industry concentration The situation of rising competition and increasing competition.
Huachuang Securities believes that the continuous construction of MDI, TDI, new materials and other projects is driving the company’s steady growth. The current 300,000 tons of TDI projects and 80,000 tons of PMMA projects are progressing steadily, and they are expected to be completed and put into operation in October 2018. ; The first phase of the 70,000-ton PC project was officially put into operation in late January 2018, and the second phase of the 210,000-ton PC project is expected to be completed and put into operation in February 19; according to the annual report, the US 400,000-ton MDI integration project has already Certain advancement, taking this as the fulcrum is expected to fully spread the North American polyurethane market. The Yantai Large Ethylene Project will begin to advance in the fourth quarter; other new projects such as water-based paint, TPU, ADI, etc. Capacity expansion is also progressing steadily.
　　 Industry analysts believe that the price of MDI has risen sharply since the beginning of 2016, and the current price is still relatively high. The industry leader Wanhua Chemical is expected to continue to realize high profits (annualized PE8X). In the long run, the operating rate of the Bajiao Industrial Park has maintained a high load for a long time, new products are gradually put into production, and the proportion of high-margin products has gradually increased. At present, the company’s Hungary BC company asset injection + group’s overall listing is progressing in an orderly manner. After completion, Wanhua is expected to grow into an international chemical giant comparable to BASF’s vision.