This article is reprinted from: Marking Machine Network http://www.technifor.cn/
Huatong Technology Takes Out Hundreds of Millions in Assets to Restructure Unity Laser
Report by reporter Cheng Jiulong and intern Dai Yaqin: After several twists and turns, the "marathon-style" restructuring drama of Wuhan's laser industry has finally come to an end.
Yesterday, two former local rivals and leading manufacturers in the domestic laser cutting equipment sector—Huatong Technology and Unity Laser—ended their "Chanyuan Alliance" in Guanggu. Both parties jointly established Wuhan Huatong Unity Laser Technology Co., Ltd. (hereinafter referred to as "Huatong Unity").
The newly appointed general manager of Huatong Unity, Wu Jianguo, stated: "After the restructuring is completed, the new company's output value is expected to exceed 1 billion yuan, with sales scale breaking through 1.2 billion yuan, leaping to become a flagship in China’s laser industry."
Restructuring Blueprint >>>
Huatong Technology Invests Nearly 100 Million Yuan
The handshake between Huatong Technology and Unity Laser this time has been quite a tortuous process.
The latest restructuring plan is as follows: Huatong Technology will use its own funds of 20 million yuan to acquire 8.07% equity of Shanghai Unity PRC held by Unity Laser. Subsequently, Huatong Technology will contribute 79.8 million yuan of its own funds for the acquisition of 8.07% equity of Unity PRC and 51% equity of Wuhan Farley; Unity Laser will contribute 42.93% equity of Unity PRC it holds; Wuhan Optics Valley Laser Technology Co., Ltd. will contribute 70% equity of Wuhan Optics Valley Kewei Crystal Laser Technology Co., Ltd. it holds, and together establish Wuhan Huatong Unity Laser Co., Ltd.
After the restructuring is completed, Huatong Unity will directly control three companies: Shanghai Unity PRC, Wuhan Farley, and Wuhan Kewei Crystal. “In terms of asset scale and R&D capabilities in the field of high-power laser cutting equipment, the new company will be unmatched domestically,” Wu Jianguo said confidently about the upcoming long voyage of the new aircraft carrier in the laser 'blue sea' where scale determines success.
More importantly, after the establishment of the new company, it will enjoy the excellent financing platform of the listed company Huatong Technology. "Currently, many projects under us meet the conditions for additional issuance financing," Wu Jianguo frankly admitted. Huatong Technology also expressed that: "When the conditions are ripe, we will appropriately initiate the work of additional issuance."
Strategic Deployment >>>
Enter the Global Top Four in the Laser Field within Five Years
The combination of Huatong Technology and Unity Laser is seen as the first strong alliance in the domestic laser cutting field.
Before the restructuring, Huatong Technology already owned core technologies for laser cutting systems and two internationally renowned brands of cutting equipment. Its subsidiary, Wuhan Farley Company, had completed the digestion and absorption of international advanced cutting technology and product manufacturing transfer, and established a global marketing network.
Unity Laser's subsidiary, Shanghai Unity PRC, is already the largest manufacturer of laser cutting machines in China, with an annual sales scale reaching 650 million yuan. Wuhan Kewei Crystal Company is also one of the seven companies globally capable of producing high-power fast-axial flow lasers exceeding 4000W.
How to effectively integrate the businesses under its umbrella? This is the next strategic key for the newly established Huatong Unity. For this, the "new helmsman" Wu Jianguo indicated that they are currently working on the integration of Kewei Crystal Company and Hengxin Company in the high-power laser business, and the integration of Farley Company and Unity PRC in research and development and management. "Integration at the capital level has already begun, ultimately forming a unified space and personnel structure."
Huatong Unity's long-term goal is to increase the export rate of complete sets of cutting equipment from the current 8% to 30% within three to five years. "In the field of high-power laser cutting equipment, enter the global top four," Wu Jianguo said.
Industry Impact >>>
An Equipment Manufacturing Cluster Appears in Guanggu
During the vigorous development of the equipment manufacturing industry in Guanggu, the birth of Huatong Unity has far-reaching implications for it.
Public data shows that the equipment manufacturing industry has become the dominant industry in various industrialized countries, but its proportion in China's manufacturing sector is less than 30%, far lower than in the United States, Japan, and Germany. In this context, Guanggu, known as the "bridgehead" of Wuhan's economy, is attracting an increasing number of manufacturing giants to settle here—Alstom Wugang New Factory, the world's top 500 company Foxconn, the largest shipbuilding supporting industry park in Central China, and the new factory area of Wuhan Heavy Machinery undergoing relocation—Guanggu has formed a vast equipment manufacturing cluster.
"In recent years, lasers have played a major role in transforming traditional industries, especially the equipment manufacturing industry," said a Wuhan laser insider. "Adjacent to the Guanggu manufacturing base, Huatong Unity can be considered to have a geographical advantage."
A larger market comes from the state's increasing emphasis on the equipment manufacturing industry, which objectively provides a broad market space for the development of the laser cutting machine industry. Ma Xinjiang, chairman of Huatong Technology, stated: "According to estimates, China's demand for laser products in the next five years will exceed 60 billion yuan." For Huatong Unity, this undoubtedly means a huge market space.
Reporter Observation
Behind the Change in the Restructuring Plan
Is Chu Tian Laser Seeking a Spin-off Listing?
At around nine o'clock on the evening of October 30th, a quiet announcement from Huatong Technology was posted on the website of the Shenzhen Stock Exchange: The company plans to terminate the original targeted rights issue restructuring plan and instead proceed with "a self-funded restructuring with Wuhan Unity Laser Co., Ltd."
The once highly anticipated restructuring of Wuhan's three major laser enterprises has again been placed in the spotlight due to Chu Tian Laser's sudden withdrawal. The "handshake" among the three laser giants in Wuhan earlier this year seems like yesterday, but what happened in the past nine months that led Chu Tian Laser to exit prematurely?
Are the operating results of some main entities not ideal?
The reason for the change in this restructuring, as stated in Huatong Technology's announcement, is that the joint sponsor institution of Huatong Technology—United Securities Co., Ltd.—believes that "due to the unfavorable changes in the financial status of some entities intended for this fundraising and the operating results falling below expectations, continuing to complete this issuance and restructuring acquisition will not be beneficial to enhancing your company's core competitiveness and profitability."
Previously submitted restructuring materials by Huatong Technology have already received "feedback opinions" twice from the CSRC, delaying the targeted rights issue repeatedly. A knowledgeable person revealed: "Mainly regarding the valuation issues of some restructuring assets, the CSRC still has objections."
If the proposed restructuring enterprises, Shanghai Unity PRC and Wuhan Farley, have both shown double-digit growth in their operating performance, then the market speculates whether the market performance of Chu Tian Laser's restructured part of the assets—Qizhi Laser—this year is related to its final withdrawal from the restructuring?
On October 29th, during a meeting of the Hubei Federation of Industry and Commerce, I coincidentally met Sun Wen, chairman of Chu Tian Laser. When asked whether there has been a market downturn in medical lasers (the main business of Qizhi Laser) this year, he did not deny it, only stating: "The situation in the second half of the year has improved somewhat." I learned that the time when the restructuring plan was submitted to the CSRC was exactly in the first half of the year.
Is it a separate listing or a "shift in affection"?
Regarding Chu Tian Laser's "exit", multiple people in the Wuhan laser industry expressed no surprise. "Actually, Chu Tian Laser has never abandoned its plan for a separate listing," a person close to the senior management of Chu Tian Laser once revealed to me.
I couldn't help but recall that on January 1st this year, at the signing ceremony of the restructuring of the three major laser companies in Wuhan, Sun Wen publicly stated: "We will strive to achieve a spin-off listing of Qizhi Laser in three years." His determination was evident.
There is an unverified claim that Chu Tian Laser's subsidiary, Qizhi Laser, which mainly engages in medical business, was established specifically for future separate listing. However, due to policy factors in recent years, the medical laser product market has faced significant pressure, prompting Chu Tian Laser to increase its investment in industrial lasers.
The latest news I obtained is that Chu Tian Laser is in close negotiations with a large American laser company for cooperation. Both parties will form a joint venture with contributions of funds and assets, mainly involving industrial lasers and marking machines. "The controlling interest is on the American side, but the actual operation is still ours," a senior executive of Chu Tian Laser revealed to me: "We plan to take it public when the timing is right."