21st Century Business Herald: Elephant landing, Sany negotiates the purchase of new overseas projects

Source: 21st Century Business Herald Reporter: Feng Shuqin

"Elephants are operating very well at the moment and can be said to exceed expectations." On November 11, Xiang Wenbo, president of Sany Heavy Industry, told this reporter. As for new M&A targets, Xiang Wenbo bluntly said that "many are in contact".

With the end of Sany Heavy Industry's acquisition of Germany's Putzmeister (also known as "Elephant"), the future development direction of Sany Heavy Industry is becoming clearer. Xiang Wenbo said in an interview with this reporter that Sany will strengthen its domestic defense in the future, and at the same time further attack the international market, especially developing countries will become the main battlefield.

Xiang Wenbo said that at present, Sany overseas development is gradually changing from investment to factory to mergers and acquisitions, and after the company grows stronger in the future, mergers and acquisitions will be used as the main way to integrate the market and expand at a lower cost, and become the main path for Sany to "go to sea" in the future.

At the same time, Liang Wengen, chairman of Sany Heavy Industry, said in an interview with the media during the 18th National Congress of the Communist Party of China that Sany has invested in many foreign places, including Brazil, Germany, the United States, Indonesia, etc. In the future, according to the plan, we will increase overseas investment, and at the same time, we will also increase the leverage of overseas acquisitions, and we will not rule out another acquisition in Europe.

　Overseas investment transformation

At the beginning of this year, Sany Heavy Industry acquired the worldConcrete machineryThe giant Putzmeister of Germany has completed *5,656 overseas mergers and acquisitions in the history of Sany's development. Xiang Wenbo revealed that Putzmeister's profit this year has quadrupled that of last year, and in 2010, Putzmeister's profit was 6 million euros, and this year's profit is expected to exceed 40 million euros.

This acquisition has also become an important turning point in the strategic development of Sany Heavy Industry, that is, it has gradually realized its transition from investment and factory establishment to direct M&A investment. In this regard, Xiang Wenbo told this reporter that the focus of Sany Heavy Industry's overseas expansion in the future will shift from investment to mergers and acquisitions, and the scope of mergers and acquisitions is not only in Europe and the United States, but also in developing countries.

According to our reporter, Sany Heavy Industry has recently assisted Putzmeister to complete a new acquisition, investing 8.1 million euros to acquire 100% of the shares of Intermix GmbH held by Hans-George Stetter. As for other acquisition targets, Xiang Wenbo said, "Many are in contact, but this kind of opportunity is hard to come by."

At the same time, he said that in the case of the deterioration of the international trade environment, Sany will continue to follow the rules of the game of operating according to law, pay more attention to strategic mergers and acquisitions, rather than financial mergers and acquisitions, and will not simply merge and acquire for the sake of scale expansion.

On November 11, Liang Wengen said that internationalization has become the company's third venture. In 2012, the company's overseas revenue reached 10 billion yuan, accounting for about 15% of the total revenue. At the same time, he expects that in five years, the proportion of sales revenue in the international market will increase to 40%-50% of the company's total revenue, which is about three times the current level.

However, as a Chinese private enterprise, its overseas expansion has not been smooth sailing. In July this year, the wind farm project operated by Ralls, an affiliate of Sany Group, was directly banned by the Committee on Foreign Investment in the United States on the grounds of "threatening US national security", and on September 28, US President Barack Obama also issued an executive order banning the project on the same grounds, requiring Ralls to withdraw all investments within 90 days. Ralls then took CFIUS to court and added Obama as a defendant.

In Xiang Wenbo's view, world diplomacy itself is the result of a game, and the case will be tried in the United States on November 28, and there will be no substantive results before that.

Internal integration

In the face of the downturn in the industry brought about by the slowdown of the domestic economic situation, Xiang Wenbo believes that the domestic market still has a lot of room for development, China's industrialization and urbanization have not yet been completed, and a large number of engineering facilities and construction machinery are needed.

In the first three quarters of 2012, Sany Heavy Industry achieved operating income of 40.699 billion yuan, a year-on-year decrease of 1.46%; the operating profit was 6.679 billion yuan, a year-on-year decrease of 29.19%; The net profit attributable to shareholders of the listed company was 5.874 billion yuan, a year-on-year decrease of 23.42%.

The overall industry downturn has not only brought about a decline in profits, but also a series of events such as "layoff door", "welfare door", "sales model" and so on.

Sany has developed rapidly for 16 years, from scratch to the sixth in the world, and there are indeed risks in the high speed, and the quality of personnel, management foundation, and enterprise structure need to be changed. Therefore, while seeking overseas investment and transformation, Sany Heavy Industry reintegrated the construction machinery division, and merged the original five business divisions into three business divisions in order to better achieve economies of scale.

He said that Sany's development plan is very clear, and the industrial positioning is construction machinery. The direction of industrial development is also very clear, where there is no construction machinery involved, it will be involved in the future, and will continue to maintain a leading position in the domestic construction machinery industry.