Nanjing Port Co., Ltd. (002040.SZ) and Jiangsu Lianyungang Port Co., Ltd. (601008.SH) announced on May 20 that Jiangsu Port Group will be officially established on May 22. After the establishment of the group, 55 percent equities held by Nanjing Port (Group) will be consolidated into Jiangsu Port Group at discounts.
In addition, Lianyungang Port Group holds 509 shares of Lianyungang Port, accounting for 50.11 percent of its total share capitals. Such equities will also be consolidated into Jiangsu Port Group at discounts.
It is noteworthy that Jiangsu consolidated port groups after Liaoning, Hebei, Zhejiang, Guangxi and Hainan. Insiders believe that the establishment of the port group in Jiangsu will prevent competition and give play to size effects and seize opportunities under Belt and Road initiatives.
“The establishment of Jiangsu Port Group will consolidate resources. It will improve the strength of ports in Jiangsu and seize opportunities under Belt and Road initiatives.” Ju Haitao, a responsible person from Lianyungang Port Group told the National Business Daily.
Two listed port companies consolidated
Jiangsu proposed to consolidate ports and further the integrated reform of ports in March. It planned to establish Jiangsu Port Group through the consolidation of equities of port groups and enterprises in Jiangsu Province.
As two listed port companies in Jiangsu, Nanjing Port and Lianyungang Port are two key ports to be consolidated. Nanjing Port and Lianyungang Port announced on May 20 that Jiangsu Port Group will be officially established on May 22.
Based on the announcement and after the establishment of the group, 55 percent equities held by Nanjing Port (Group) will be consolidated into Jiangsu Port Group at discounts. Nanjing Port (Group) will manage the group as the controller. Meanwhile, Lianyungang Port Group holds 509 shares of Lianyungang Port, accounting for 50.11 percent of its total share capitals. Such equities will also be consolidated into Jiangsu Port Group at discounts. The controlling shareholders of the two listed companies will not change after the completion of the equities transfer. The actual controller will be the State-owned Assets Supervision and Administration Commission (SASAC) of Jiangsu Provincial Government.
Jiangsu Provincial Government released the Plan on the Development of Riverside and Coastal Ports in Jiangsu Province (2015-2020) (hereafter referred to as the Plan) on May 12, which is regarded a guiding document for the planning of port groups in Jiangsu Province in the future.
The Plan proposed that Jiangsu will make plans on the development ports at different levels from 2015 to 2030. Lianyungang, Nanjing, Zhenjiang, Suzhou and Nantong will be developed as key ports while Yangzhou, Wuxi (Jiangyin), Taizhou, Changzhou and Yancheng will be developed into regional key ports. All ports will cooperate and coordinate in development with different layers.
According to the Plan, Lianyungang is positioned as a demonstration area and regional international port in China-Kazakhstan logistics base and the cooperation among different regions. As a key port for containers transportation in areas along Longhai Railway, Lianyungang will be developed into a base port for containers transportation. For the import of iron ores, it will be developed into a professional port for the loading of over 20 tonnes of iron ores.
Nanjing port was positioned as a “regional shipping and logistics center”. For containers transportation, Nanjing port will focus on the transportation of containers for offshore and domestic trade. It will focus on the loading of iron ores for project ships. For coal transportation, Nanjing port will develop for ships with a transportation of less than 70,000 tonnes. It will develop vehicles port covering surrounding distribution network.
“The competition between Lianyungang and Nanjing used to be intense. The new plan will give full play to their own advantages, which will be the biggest advantage for the establishment of the port group.” Luo Deming, an expert on the port industry, told the National Business Daily.
Seize opportunities under Belt and Road initiatives
As a matter of fact, Jiangsu is not the first province in establishing port groups. Liaoning, Hebei, Zhejiang, Guangxi and Hainan have announced the establishment of their own port groups.
Luo indicated that “compared with other provinces, Jiangsu owns different types of port resources. It faces difficulties in consolidating port resources. As a result, it is later than other provinces in establishing port groups.”
It is learnt that ports in Jiangsu rank high in China. A total of 2.41 billion tonnes of cargoes were handled in ports in Jiangsu in 2016, representing an increase of 3.3 percent year on year. 2.16 billion tonnes of cargoes, 450 million tonnes of cargoes for foreign trade and 16,216,000 standard containers were handled at ports above the designated size, representing an increase of 3.7 percent, 12 percent and 1 percent.
Suzhou, Lianyungang, Nanjing, Nantong, Zhenjiang, Yangzhou, Taizhou and Jiangyin handled over 100 million tones, making Jiangsu the province with most ports with cargo handling capacities of over 100 million tonnes.
“Besides Nanjing and Lianyungang, another six ports, including Nantong and Taizhou, are also competitive, which intensified the competition among the ports in Jiangsu. The establishment of the port group will prevent competition and facilitate differentiated operation.” Luo said.
It is noteworthy that Jiangsu is covered by the Belt and Road initiatives, the Yangtze River Economic Belt and other national strategies. Jiangsu is repositioned under the Belt and Road initiatives. It will be developed into an open port, comprehensive transportation hub and international trade and logistics center.
Ju indicated that “the establishment of the port group will improve the competitiveness of ports in Jiangsu and seize the opportunities under the Belt and Road initiatives. Lianyungang is a key port under the Belt and Road initiatives. The establishment of the port group will give play to the advantages of Lianyungang, have accesses to countries covered by the Belt and Road initiatives and improve the competitiveness of the ports in Jiangsu.”
Translated by Star Zhang
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