Shenzhen New Nanshan Holding (Group) Co., Ltd.

Shenzhen New Nanshan Holding (Group) Co., Ltd. (stock code 002314.SZ) is an enterprise whose businesses are real estate development and logistics real estate. On January 24, 2018, Shenzhen New Nanshan Holding announced that the Listed Company Mergers, Acquisitions and Restructuring Review Committee of the China Securities Regulatory Commission had unconditionally approved its restructuring plan, namely to absorb and merge Shenzhen Chiwan Petroleum Supply Base Co., Ltd. (Shenzhen Chiwan Petroleum Supply Base, 200053.SZ) through a share swap involving the issuance of A shares. Baowan Logistics is the core asset of Shenzhen Chiwan Petroleum Supply Base; data in Shenzhen Chiwan Petroleum Supply Base’s 2017 interim report showed revenue from its logistics warehousing (storage) business of 289 million yuan, accounting for 81.1% of total revenue. According to data in Cushman & Wakefield’s “China High-End Logistics Market 2015 Review”, Baowan Logistics held a 9% market share among China’s major logistics real estate developers in 2015, second only to GLP and Goodman.

According to Shenzhen New Nanshan Holding, after the acquisition of Shenzhen Chiwan Petroleum Supply Base was completed, logistics real estate would form, together with the traditional real estate development business, the twin cores of the company’s future development. The company believed that the combination would produce synergies: on the one hand, drawing on the company’s experience and strengths in real estate development, it would enhance the development and construction capabilities of the surviving company’s logistics business and, with land scarce, raise land-use efficiency in development and construction and the operation and management of logistics parks; on the other hand, relying on the scale, resource and brand advantages of Shenzhen Chiwan Petroleum Supply Base in the logistics field, it would improve Shenzhen New Nanshan Holding’s ability to acquire land resources, thereby connecting the logistics real estate and residential real estate industry chains. CRIC’s “2017 China Real Estate Enterprise Sales” ranking showed Shenzhen New Nanshan Holding with sales of 6.23 billion yuan, ranking 174th. According to Shenzhen New Nanshan Holding’s 2017 third-quarter report, the company’s operating revenue in the first three quarters of that year was 2.708 billion yuan, down 33.05% year on year, and net profit was 103 million yuan, down 79.36% year on year.

The actual controller of both Shenzhen New Nanshan Holding and Shenzhen Chiwan Petroleum Supply Base is China Nanshan Development (Group) Co., Ltd. Less than a week after Shenzhen New Nanshan Holding announced that the restructuring had been approved unconditionally, Shenzhen Chiwan Petroleum Supply Base issued its 2017 annual earnings forecast on January 29, 2018, projecting that net profit attributable to shareholders of the listed company would plunge from a profit of 1.92 million yuan in 2016 to a loss of 50 million to 70 million yuan in 2017. The board secretary’s office of Shenzhen Chiwan Petroleum Supply Base explained to an Economic Observer reporter that the heavy loss stemmed mainly from its investee company Chiwan Sembawang, whose operating profit fell sharply as it was dragged down by the slump in the oil industry, while the logistics bases and logistics parks were in healthy overall operating condition in 2017, with good returns.