The restructuring of central enterprises has taken a big step. What will the new 100 billion level central enterprises bring to the power transmission and distribution industry?

Recently, the news that China Western Power Group and the subordinate enterprises of the State Grid will establish a new central enterprise of 100 billion yuan attracted market attention, and a "giant" power equipment manufacturing enterprise emerged.

In the evening of September 14, China Western Power announced that "after receiving the notice from the controlling shareholder China Western Power Group, the State-owned Assets Supervision and Administration Commission of the State Council studied and reported to the State Council for approval, it agreed to implement the reorganization and integration of some subsidiaries of China Western Power Group and State Grid Corporation Limited, and set up a new company with the State-owned Assets Supervision and Administration Commission of the State Council performing the responsibilities of investors on behalf of the State Council, China Western Power Group and State Grid Corporation Limited (hereinafter referred to as "State Grid"), Jiangsu Nanrui Hengchi Electric Equipment Co., Ltd., Jiangsu Nanrui Taishida Electric Co., Ltd. and Chongqing Nanrui Borui Transformer Co., Ltd. held by Xuji Group Co., Ltd., Pinggao Group Co., Ltd., Shandong Electric Group Co., Ltd. and State Grid Electric Power Research Institute Co., Ltd., which are affiliated to the State Grid, are transferred into the new company as a whole. "

Why should we set up a new state-owned enterprise with the level of 100 billion? Du Meng, chairman of the China Enterprise Capital Alliance, told reporters: "The restructuring of China Western Power and its subsidiaries is conducive to expanding the enterprise scale and improving the management ability. From the perspective of the market, China's electrical equipment has a first-class level, and the merger or reorganization of related assets in this field is conducive to optimizing the allocation of resources, reducing costs, and better participating in international competition."

Preparation of new 100 billion central enterprises for more than half a year

It is not a sudden decision to set up such a new state-owned enterprise with a level of 100 billion.

As early as December 23, 2020, four listed companies, Xuji Electric, Pinggao Electric, China XD and Baoguang Electric, respectively announced that China XD Group is planning a strategic restructuring with Xuji Group and Pinggao Group, subsidiaries of the State Grid Corporation of China, but "the relevant plans have not been determined, and the plans also need to be approved by the relevant competent authorities."

As soon as the news came out, the market was in an uproar. At that time, the share price of China XD soared from 4.05 yuan/share to 5.26 yuan/share.

Qi Haishen, president of Beijing Teyi Sunshine New Energy, told the reporter of China Times: "Some of China's previous electric power enterprises rely on the advantages of resources. The scale of the enterprises is expanding rapidly, and the extensive development is relatively large. Some have also set foot in many sideline or extension business areas. There are many electric power resources products, equipment, and construction services and other aspects of the layout, which makes the problem of homogeneity between enterprises more prominent. To some extent, there is excessive competition within the industry, and the problem of internal consumption is prominent."

Spin-off and restructuring to speed up industrial adjustment

According to the previously announced reform plan, by the end of 2021, the equipment manufacturing enterprises of the State Grid Corporation of China will be completely divested. At the same time, the provincial power grid enterprises should also withdraw from the equipment manufacturing enterprises holding shares.

At the press conference of the National Development and Reform Office on March 8 this year, Zhao Chenxin, a member of the Party Leadership Group and Secretary-General of the National Development and Reform Commission, said at the meeting that "in 2021, we should focus on deepening the reform of key industries, including promoting the implementation of the implementation plan for the reform of competitive industries such as equipment manufacturing, design and construction of power grid enterprises."

Why would the equipment manufacturing enterprises of the State Grid after the divestiture restructure with China XD?

According to the official website of China XD, China XD Group is the only central enterprise in China with the complete transmission and distribution industry as its main business, while Xuji Group and Pinggao Group, subordinate to the State Grid, are the leading enterprises in the fields of DC transmission, smart grid and high-voltage switch respectively, and the three manufacturing enterprises under Shandong Electric and Nanrui Group, as long as they are merged, A "Big Mac" power equipment manufacturing enterprise will rise.

How will this restructuring affect the transmission and distribution industry? Qi Haishen believes that: "The business fields of many electric power enterprises are both complementary and overlapping, and there is competition between equipment manufacturing and power generation, transmission and distribution. Repeated construction, ineffective investment and other phenomena are frequent, which is obviously not suitable for the development needs of the power energy industry in the new era, especially the requirements of new energy as the main energy development of the new power system in the" 14th Five-Year Plan ". However, this merger and reorganization will produce synergy and improve Comprehensive service capability of enterprises. "

As of the closing of September 17, the total market value of China XD reached 31.88 billion yuan. The total market value of Xuji Group and Pinggao Group's A-share listing platforms, Xuji Electric and Pinggao Electric, also reached 21.35 billion yuan and 11.83 billion yuan respectively.