China

China’s Two State-Owned Building Material Companies in Trading Halt as Market Awaits Unveiling of Merger Plans

Summary:

  • Trading in the shares of the nine publicly traded units of China National Building Material Group Co., Ltd. (CNBM) and China National Materials Group Corporation (SINOMA) was halted on September 7 as the two firms are “waiting to announce details of merger plans”, as reported by WORKERCN.CN.
  • The subsidiary companies whose trading has been halted include China National Materials Company Limited (1893.HK), China National Building Material Co Ltd (3323.HK), Beijing New Building Materials PLC (000786.SZ), and Sinoma Science & Technology Co., Ltd (002080.SZ).

Why It Matters:

  • The merger between CNBM and SINOMA was announced in August 2016 and it was approved by regulators in February this year. However, no actual consolidation actions have been taken among the publicly traded units of the two groups. The market believes that the trading halt suggests that effective consolidation plans are about to be announced.
  • Both CNBM and SINOMA are state-owned enterprises (SOEs). China has recently been accelerating consolidations among SOEs, and the long-expected merger between the two energy giants China Guodian Corporation and Shenhua Group was officially announced several days ago.
  • Both CNBM and SINOMA are primarily engaged in the production and sales of cement and other building materials. After the merger is complete, the combined total assets of the new company will reach RMB 550 billion.