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Merger is an angle or a devil for the engineering machinery industry

Author: HXJQTime: 7/20/2012 1:17:10 AM

It will be a long time for Chinese engineering machinery industry(ball mill) going flourishing because the debt of the merger is high that the risk will explode itself during the industrial shuffle. On 2ed July, Qingke Research Center announced a set of merger statistics of the Chinese enterprises. During the first half year in China market, among the 422 merger cases, machinery manufacturing in the lead has completed 50 cases which account for 11.8%.

The phenomenon of merger among Chinese engineering machinery giants is becoming prominent, especially the frequent overseas merger. On the one hand, European debt crisis has brought the opportunity that the value of Target Company goes down. On the other hand, this represents its longing for the core technology as well as its demand towards expanding the overseas market.

Since 2001, the engineering machinery industry has a hard time. Along with a continuous fall in investment growth of the real estate and infrastructural construction, the large shrinkage of the downstream demand in various engineering machinery products, and financial strain of the guest room, these enterprises adopt a low down payment or even zero down payment of the sales model to stimulate marketing in order to gain their customers during fierce competition. This overdraft sales strategy has already exposed the risks.

According to statistics, the first-quarter receivable total accounts of the engineering machinery listed companies which rank in the top eight is 58.374 billion yuan, which increases by 41.5% compared with that in 2011. The sum of the net cash flow produced by their operating activity has fallen from 9.652 billion in 2010 to 2.814 billion, which is far from a 23.012 billion yuan net profit. 

At present, a shrinking sign of the infrastructural investment in railroad has appeared that some people optimistically believe that the light is in the tunnel. But this turn investment cannot restore its past prosperity, and it is going to be a longer time to thrive for the entire engineering machinery industry. Meanwhile, high debt merger still probably exposes the risk in the process of industrial shuffle.