Integration of DSIC and SHGSIC Is Launched Officially

CSIC’s listed company China Heavy Industry, on the night of June 2, released an announcement that Board of Directors review and pass a proposal for integration of the wholly-owned subsidiaries Dalian Shipbuilding Industry Co., Ltd (DSIC) and Shanhaiguan Shipbuilding Industry Co., Ltd (SHGIC). To implement requirements of the central party and government for pushing supply-side structural reform and spirit of deep civil-military integration development strategy, to better address complex and severe situation faced by shipbuilding industry up to now, to strengthen internal restructuring, resource integration and capacity recombination, to facilitate transformation and upgrading of marine equipment business by complementary advantages, it is decided by the studies that integration of the wholly-owned subsidiaries Dalian Shipbuilding Industry Co., Ltd (DSIC)and Shanhaiguan Shipbuilding Industry Co., Ltd(SHGIC) be launched, intending to transfer 100% equity of SHGIC held by the company to DSIC, where SHGIC shall become the wholly-owned subsidiary under DSIC, reserved with legal person.
   As announced, integration of Dalian Shipbuilding Industry Co., Ltd (DSIC) and Shanhaiguan Shipbuilding Industry Co., Ltd (SHGIC) conforms to national policy, also favors future development of the company. First, implement civil-military integration development strategy, boost market competence in military products, give full play of DSIC’s advantages in military industry, coordinate to use SHGIC’s facility and resources so as to provide capacity guarantee for further contracting more large major naval warships and naval auxiliaries, and lead SHGIC’s transformation from merchant ships to military ones. Second, coordinate superior resources as a whole, enhance capability in synergetic development of business, give full play of technical and brand advantages in DSIC’s shipbuilding and offshore engineering and SHGIC’s ship repairs, plan orientation of advantageous industries between the two subsidiaries, strengthen synergic capability in advantageous businesses so as to form a resultant force for jointly exploiting market and new field and flexible ordering in five dominant businesses of military products, merchant ships, offshore engineering, ship repair and demolition, and equipment fabrication, in favor of SHGIC’s turning from loss to profit. Third, promote supply-side structural reform to achieve “de-capacity”, where the capacity for building merchant ships shall be cut down properly in accordance with the national industrial policies and market demand after integration of the two subsidiaries.
   DSIC was founded in 1898, known as “flagship of China shipbuilding industry”, which is the first domestic shipbuilder ranking among Global Top 10 Shipbuilders. DSIC is a mega modernized assembly shipyard under CSIC, which is domestically the largest in scale, the most diversified in product mix, and the most competitive in international market. Up to now, there are two major factory zones of No.1 yard and No.2 yard, “No. 3 yard” already put into operation, and offshore engineering base, with a total coverage of 3.4 million ㎡ and 15000 employees. DSIC converges five major sectors of military industry, shipbuilding, offshore engineering, ship repair and demolition, and heavy industry.
   The ex-SHGIC was Shanhaiguan Shipyard, the first tier state-run enterprise affiliated to CSIC, set up in 1972, put into production in 1986, and restructured as SHGIC in 2007. SHGIC is a mainstay shipyard in China, mainly engaged in shipbuilding, ship repair and conversion, demolition, offshore engineering manufacture and maintenance, naval auxiliaries and steel structure fabrication.

It is understood that both DSIC and SHGIC are the wholly owned subsidiaries of the company up to now. DSIC(including DSIC Offshore Engineering)has a holding orderbook of 51 ships amounting to 203360 CGT while SHGIC having that of 35 ships amounting to 521315 CGT, which means the new DSIC after integration will have a holding orderbook of 86 ships amounting to 2554915 CGT to rank the 3rd place domestically.