Iron and steel companies were the most glorious decade in history from 2000 to 2010. Steel prices experienced a soaring, from 2000 yuan per ton to 6000 yuan per ton. BHP Billiton, Rio Tinto and Vale in Brazil were the main iron ore producers. And thus made a fortune in China. Looking at the financial statements of steel companies in the past, the change from earnings per share of more than 1 yuan to a loss of a few yuan per share last year can be described as "earth-shaking." So, have the steel companies been in a slump since then? The author believes that the most difficult period for steel companies has passed, and steel companies are standing on the next frontier, which is restructuring and e-commerce.
Learn from history and summarize the inadequacy
The history of China's economic development, so far, has not only the elements of planned economy, but also the promotion of market economy. The development history of steel enterprises can be said to be a typical in the history of China's economic development. By 2012, the National Development and Reform Commission will need to approve the projects of steel companies. This is a typical planned economy feature. From 2002 to 2012, the government used the banner of preventing overheating of the market and leading to overcapacity and increasing capacity on the other. The strength of the approval has resulted in the steel production capacity (900 million tons) being greater than the actual consumption capacity (700 million tons). It is not an exaggeration to say that the reason for the excess steel production capacity is the government's over-approval of the project. The National Development and Reform Commission is constantly increasing its efforts to approve steel projects, while the Ministry of Industry and Information Technology is increasing the elimination of outdated production capacity, and the ministries are extremely uncoordinated.
At present, there are 2,450 iron and steel enterprises in my country, and almost every province has decent iron and steel enterprises. This is approved according to the requirements of regional construction. In those years when steel prices were strong, China, as the world's largest steel consumer, did not In terms of pricing power, the price of iron ore rose from US$30 in 2000 to US$170 in 2010. In terms of the iron ore pricing model, China has changed from a long-term association mine to a spot mine, and from Baosteel as a negotiator to the China Iron and Steel Association Negotiations came to no avail, and they suffered repeated setbacks. Because there are too many buyers in China, one of the fundamental reasons is that steel companies have torn each other out in price negotiations. Coupled with the fact that Japan was disrupting the situation at that time, there was no possibility of success in price negotiations.
After the new Chinese government decided to slow down the economy, all this was changed. We see that domestic steel companies are not doing well, but Australian and Brazilian companies are not doing well. The world economic order is completely in the hands of the Chinese government. The “Belt and Road” strategy proposed by the new government once again faces major cyclical opportunities for iron and steel companies. Because China has to establish cooperative relations with 60 countries along the Belt and Road, international production capacity cooperation will be the main focus of China’s foreign economic cooperation in the next few decades. form. However, it is still worthwhile to summarize past experience and lessons in a timely manner. Otherwise, steel companies will still not be able to escape the fate of cyclical rise and fall. Compared with the prosperity of steel enterprises brought about by the glorious ten years of real estate in the past, this time is much longer. The author predicts that there will be more than 50 years of prosperity. This cycle is based on the 89-year period given by Fibonacci. According to the calculation of the upswing cycle, China has experienced 34 years of economic upswing, and there is still a more prosperous economic upswing period of 55 years. As the basic industry of the economy, the steel industry should take the lead in responding to changes in this economic cycle. But this requires serious lessons learned and effective countermeasures to the changes in external factors, and this is reorganization, through internal reorganization, to improve China's bargaining power in iron ore imports.
In the last round of China’s economic cycle, it was state-owned enterprises that negotiated overseas import agreements, and it was also state-owned enterprises that made equity acquisitions overseas. However, as the largest state-owned enterprise among them, Chinalco has repeatedly suffered setbacks in negotiations and equity acquisitions. . Why? Because those resource-exporting countries are worried about being controlled by Chinese state-owned enterprises, coupled with the instigation from the United States, ordinary equity acquisitions have become political incidents. Among them, the United States, Canada, and Australia were hostile to Chinese state-owned enterprises. North Korea, which had the best relationship with China at the time, had also artificially interrupted the acquisition and large-scale exploitation of Chinese enterprises. In foreign countries, there are frequent reports of Chinese workers being beaten by the local underworld for no reason. Practice has proved that the acquisition of equity is not an effective way, and only hiring Chinese workers for ore mining is not a long-term solution. Only by taking into account the interests of both parties and eliminating political factors can cooperation be more lasting.
Reorganizing steel companies to become stronger and bigger
Since the reform of the new government, the reform of state-owned enterprises has been adopted for state-owned enterprises and enterprises directly under local governments. The general intention is to adopt a mixed ownership method for these enterprises that do not involve state secrets, so that private capital can fully enter these enterprises. , And realize flexible operation through asset securitization, employee stock ownership system and other means to prevent the loss of state-owned assets.
In addition, considering environmental protection factors, the future development of steel enterprises must shift to an environment-friendly development mode.
The above-mentioned reform and development requirements have determined that the multiple and scattered development mode no longer meets the needs of future economic development. Excessive competition has harmed everyone's interests and must be contained.
It is impossible for China to engage in real estate again to drive these companies. In fact, China’s urbanization rate is close to 60%. Calculated on the basis of a final urbanization rate of 70%, calculated on an annualized 1% urbanization rate growth, only domestic real estate Driven by the demand for steel, only 10 years are left. The demand for steel is no longer a growth pole of real estate, but more in manufacturing fields such as automobiles.
Considering environmental protection, small companies face technical and financial bottlenecks. Small steel is not the future direction of China's development.
In other words, steel companies are now faced with multiple and scattered production methods, serious pollution, serious waste of resources, low production efficiency, and the embarrassment of importing raw materials without bargaining power. At the same time, they are also faced with insufficient production technology in high-end applications and environmental protection. Issues such as low investment. Therefore, in the future, iron and steel companies should solve the problem of multiple and scattered through mergers and reorganizations, and at the same time, they should accelerate the transformation, improve the level of technology application in automobile and other manufacturing applications, and increase investment in environmental protection.
In 1981, the major reorganization of American steel companies became a milestone in the V3.0 of American industrialization. China is now in such a period.
The past practice of approving steel enterprise projects according to geographical requirements has not adapted to the requirements of future industrial development. If China is to take the road of industrialization, it may be necessary to carry out industrialization reform of steel enterprises. Breaking geographical restrictions and reorganizing and integrating across the country have become more urgent. According to the vision of establishing 15 mega-cities in China's urban planning, steel companies are in such a trend. Some people predict that the restructuring of central enterprises involving steel companies is currently in full swing. It is estimated that only 3-5 central enterprises will remain, and only 300 steel enterprises including local governments and private enterprises will remain. This means that from 2,450 steel companies To 300 steel companies, 2150 will be reduced, and the restructuring rate will reach 87%, which is close to 90%.
By reading the reports of listed companies, we can understand that Fushun Special Steel, as a special steel enterprise with more than 80% of its products for military needs, has received financial support from the state. The technological transformation is underway, and Fushun Special Steel may become a representative enterprise that retains the central SOEs. As a super large steel company, Baosteel Group is currently involved in restructuring. Shandong Iron and Steel is on its way to transformation. Its acquisition of the Rizhao boutique steel project indicates that Shandong Iron and Steel has begun to shift to automobile-based production and services. Due to the special geographical location of Shandong Iron and Steel, and Shandong’s economy has always been among the top four in the country. Strong, the possibility of keeping it alone is quite high. In addition, considering the integration of the Belt and Road Initiative and the development of the western region, some steel companies in the western region may face the advantages of geographic location. The eastern region mainly produces automobile steel and high-end products, while the western region mainly produces crude steel. gave birth.
The recent reductions in the shareholdings of many government-controlled companies in the capital market indicate that the reform of state-owned enterprises is implementing a mixed ownership system, and the large transactions in the stocks of many listed companies indicate that far-sighted private capital has entered the market, especially some small ones. State-owned enterprises obviously have new takeover forces, such as Bayi Steel. Bayi Iron & Steel is located in Xinjiang and is the largest state-owned enterprise in Xinjiang. Major shareholders reduced their holdings twice in a month, but the price has risen step by step. Observing the market, we can also find that the takeover force is very strong and the phenomenon of grabbing is very prominent.
Recently, the stock market has plummeted. Among them, there are reports of "industrial capital flight". It is reported that the reduction of state-owned capital has reached 500 billion yuan in the past two months, and that the reduction of state-owned capital is one of the main culprits of the stock market crash. . These analyses obviously lack foresight and have no in-depth understanding of the reform of state-owned enterprises. Just imagine that the current market value of state-owned capital has reached 15 trillion yuan. Can the 500 billion yuan reduction be regarded as a state-owned capital flight? 500 billion yuan, in the recent Shanghai and Shenzhen stock markets, even less than half of the Shanghai stock market's daily trading volume, and only 3.3% of the value of the state-owned stock market. Moreover, it is impossible for state-owned capital to be thrown out in a short period of time. In the future, neither central state-owned enterprises nor local state-owned enterprises will lose their controlling position in a short period of time. If state-controlled shares are not reduced, how can mixed ownership be achieved? The throwing out of state-owned shares is the best period for private capital to enter. Otherwise, after a few years, the share price of these shares will be higher, and private capital has lost the best opportunity to enter. The stock price is still quite cheap. In 2007, China’s GDP was only 246619 billion yuan. In 2014, China’s GDP was 51 trillion yuan estimated by the World Bank. China is still growing at a rate of about 7% per year. In the future, the stock index will be significantly higher than the value set in 2007. 6124 points. In fact, the share prices of a considerable number of state-owned enterprise stocks have not reached the level of 2007. It is entirely possible that the share price of 2007 will be doubled or even tripled in the future.
"Internet + Steel" realizes industrialization V4.0
Not long ago, Premier Li Keqiang proposed at the executive meeting of the State Council to increase the development of cross-border e-commerce models. After inserting the wings of e-commerce, steel companies are facing a new development model of "Internet + steel". The sales volume of the e-commerce sales model established by Baosteel Group has begun to increase significantly. As this model is becoming more and more recognized, more steel companies may join this e-commerce platform in the future, and it will become a true portrayal of the Internet development of steel companies, and China may have to establish multiple such e-commerce platforms. platform. This e-commerce platform means that the Internet has been integrated into the traditional enterprise development model. Restructuring + Internet development is a new development model for the future development of steel companies, and it is also the latest version of China's industry V4.0.
Not only that, steel companies are the first to realize Internetization, which is conducive to the promotion of the overall development model of "traditional industries + Internet". Therefore, it can be judged that China's industrialization V4.0 may start with the most basic industry of the steel industry. Other industries can learn from this reform model.
In general, the restructuring of steel companies conforms to the needs of economic development and is the inevitable result of the development of the times. The Internetization of steel companies will ultimately enable China to achieve industrialization V4.0. After the reorganization, China's foreign import price negotiations have become unified, with bargaining power, and at the same time reduced resource waste and pollution, and improved production quality and efficiency. The addition of private capital has changed the drawbacks of state-owned enterprises' dominance, making their operations more flexible and sharing the fruits of China's economic development.
Steel companies are on the cusp of restructuring and e-commerce. Visionary investors will never give up this investment opportunity. Those with a market value of hundreds of billions should belong to steel companies, not those who just tell a good story. A listed company with a good name.