ZHONGTIAN STEEL EXPANDS AGAIN: Special Steel Company to go public, with $22.5 billion in debt to push ahead with $100 billion Nantong project

Mid-sky steel accelerates expansion. On September 3, the Beijing News Shell Financial Reporter learned from the Shanghai Stock Exchange that Zhongtian Iron and Steel Group Co. , Ltd. ("Zhongtian Iron and steel") released a half-yearly report showing that the company has actively promoted its listing plan in recent years, "The company will be listed on the requirements and standards of enterprise operations, special steel companies to do a good job in the pre-listing preparations. ". The reporter noted from a release document of Zhongtian Iron and steel this year that at present, the issuer is preparing to set up Zhongtian Special Steel Co. , Ltd. , to continuously bring in experts from the industry, and to set up an expert committee, laying a solid foundation for the transition to high-quality special steel. The expansion of Zhongtian steel is no stranger to capital markets, its long-term through the issuance of additional funds. In April, Zhongtian steel issued the first issue of its 2020 corporate bond, raising 1 billion yuan, all of which will be used to replenish the company's liquidity after deducting the issue fee. In April last year, Zhongtian steel issued the first issue of its 2019 public company bond, raising 1.2 billion yuan to repay loans and replenish liquidity. In addition to the listing work, Zhongtian Iron and steel a major strategic layout accelerated. Zhongtian steel official website shows that on August 28, the provincial major project Zhongtian green fine steel demonstration project was held in Tongzhou Bay Haimen port new area. The total investment of the project is about 100 billion yuan, with planned steel production capacity of 20 million tons, of which about 8 million tons are planned for the first phase. After the completion of the project, the Labor productivity will reach 2,000 tons per person per year, and the annual operating income will exceed 100 billion yuan, bringing about 80,000 people into employment. Ren Zhenhe, deputy secretary of the Jiangsu Provincial Party Committee, pointed out that Zhongtian Iron and steel should be carried out scientifically as a whole to ensure early completion of the project, early delivery and early results. Chairman of the Board, President and Party secretary of Zhongtian Iron and Steel Group, Dong Caiping, said that Zhongtian is absolutely confident and capable of following the engineering requirements of "Wall Chart Combat, time reversal, deadline completion, quality and quantity guarantee. " Build a modern, smart, green plant in 13 months. According to Zhongtian Steel's official website, the Zhongtian green fine steel project mainly produces leading domestic and international first-class fine rod and wire products, and the project is supported by the construction of a large-scale centralized control system, an intelligent manufacturing control platform and an automatic control system, system-wide application of high-end industrial robots to ensure long-term maintenance of the world's leading production efficiency and cost competitiveness. Since its establishment in September 2001, Zhongtian Steel, located in Changzhou, Jiangsu Province, has an annual output of 12 million tons of steel and a turnover of over 130 billion yuan, business covers modern logistics, international trade, education, sports and other multi-plate of the country's super-large iron and steel enterprises. In June of this year, the World Iron and Steel Association published the world's Top 50 steel enterprises list, Zhongtian steel in 2019 crude steel production 11.93 million tons ranked 36. Prior to that, Zhongtian Steel Group in the first half of last year there was a decline in operations, but benefited from the acquisition of assets, the full-year results increased significantly. According to Zhongtian Iron and Steel Group's 2019 half-yearly report, its realized operating income was 27.245 billion yuan, up 3.96 percent year-on-year; net profit was 636 million yuan, down 21.14 percent year-on-year; net profit attributable to the shareholders of the parent company was 600 million yuan, up 4.88 percent year-on-year. In 2019, Zhongtian realized operating income of 60.686 billion yuan, up 4.67 percent year on year, and net profit of 1.585 billion yuan, up 43.55 percent year on year. Zhongtian said the increase was mainly due to an increase in the ownership of the parent company after the parent company acquired the remaining 50 per cent stake in Zhongfa Iron Works, resulting in an increase in the net profit of the shareholders belonging to the parent company. As of the end of 2019, Zhongtian Steel's total assets were 38.076 billion yuan, and its total liabilities were 24.115 billion yuan, representing a 63.33 percent asset-liability ratio, down slightly from the end of the previous year. According to Zhongtian Iron and steel's 2020 half-yearly report, its operating income during the reporting period was 26.756 billion yuan, down 1.79 percent year-on-year, and its net profit was 825 million yuan, up 37.49 percent year-on-year, zhongtian said the main reason is that the price of the main raw materials in the first half of 2020 dropped compared with the same period last year, leading to increased profits. Of the various business sectors of Zhongtian steel, the steel sector recorded revenue of 26.033 billion yuan in the first half of this year, with the proportion of revenue rising further to 97.30% from 91.32% in the same period of the previous year. The revenue of the trade sector declined significantly, from $2,356 million in the same period of last year to $719 million, and its share of revenue fell to 2.69% from 8.65% . In its half-yearly report, Zhongtian Iron and steel said that its main business income in the past three years has been relatively outstanding, with the proportion of the business income of the steel plate accounting for more than 80 percent of the total business income, the steel industry is beginning to recover gradually, and the company's operating income and gross profit are relatively stable due to the company's insistence on reducing cost and increasing efficiency as the core, strengthening fine management, and continuously improving and optimizing the manufacturing cost of products. Regarding the future development plan, Zhongtian Iron and steel said that its main development goal in the future is still to make fine and excellent steel as its main business. It is currently preparing to set up Zhongtian Special Steel Co. , Ltd. . After five years of research and development, the plan, make special steel products into influential brands at home and abroad. Short-term repayment pressure by the end of the first half of 2020, Zhongtian Steel's total assets were 37.378 billion yuan, its total liabilities were 22.557 billion yuan, and its asset-liability ratio was 60.35% , down from the end of the previous year. Although Zhongtian steel has large production capacity, strong market competitiveness and a good operating performance in 2019, credit union, a rating agency, said in a June tracking report on Zhongtian steel, however, there are still some challenges such as the influence of industry cycle, the large scale of restricted currency fund, the existence of certain risks and the pressure of short-term debt repayment. The above-mentioned tracking report shows that by the end of 2019, Zhongtian Iron and steel currency funds 6.881 billion yuan, of which 2.357 billion yuan are restricted funds, with a restricted ratio of 34.26% , all of which are restricted margin, with a high restricted ratio. According to the half-yearly report of Zhongtian Iron and steel, its monetary fund was 7.709 billion yuan at the end of the period, with a total of 2.583 billion yuan of margin restricted due to the pledge. In addition, the joint credit report also pointed out that Zhongtian steel short-term debt accounted for a relatively high, there is a certain short-term repayment pressure. At the end of 2019, Zhongtian's steel current liabilities amounted to 21.019 billion yuan, up 10.96 percent from the beginning of the year, mainly due to an increase in short-term borrowings and other accounts payable. At the end of 2019, the company's short-term borrowings amounted to 4.146 billion yuan, up 100.55 percent from the beginning of the year, mainly for the company to reduce the cost of comprehensive financing, borrowing structure caused by adjustment. In its 2020 half-yearly report, Zhongtian Steel's short-term borrowings fell to 3.839 billion yuan at the end of the period, while its long-term borrowings rose 78.87 percent year-on-year to 1.814 billion yuan, mainly due to the restructuring of long-term and short-term borrowings, the company said.