Panzhihua New Steel & Vanadium Co will merge with two sister firms and issue shares to buy core assets from its parent, heading for a group listing, the company said yesterday.

 

The Shenzhen-listed Chinese steel maker will issue additional shares to swap stocks in Chongqing Titanium Industry and Sichuan Changcheng Special Steel and then delist them, according to a stock exchange filing.

 

Shares in the three companies have been suspended since mid-August pending restructuring details. Trading resumed yesterday.

 

Panzhihua New Steel jumped the 10-percent daily limit to 12.17 yuan (US$1.60) after the announcement. Chongqing Titanium also gained 10 percent to 18.79 yuan while Sichuan Changcheng Special rose 5.04 percent to 8.13 yuan.

 

Also, Panzhihua New Steel, based in Sichuan Province, will place up to 750 million new yuan-denominated A shares at no less than 9.59 yuan each to buy core assets worth up to 7.5 billion yuan from its parent.

 

The assets to be purchased from the parent include steel, as well as vanadium, titanium and mining operations.

 

The asset purchase from the parent group and affiliates is expected to help increase Panzhihua New Steel's 2007 earnings by 10 percent or more, according to Yang Baofeng, metals analyst at Orient Securities in Shanghai.

 

"Panzhihua New Steel will become an integrated firm with businesses ranging from mining, steel to titanium and vanadium, giving it a solid earnings outlook," Yang said, rating the company a "buy" and giving a target price of 13.80 yuan.

 

(Shanghai Daily November 6, 2007)