Sinochem Equipment Technology (Qingdao) Company Limited's plan to issue shares for asset purchases has been approved by the relevant review committee.

On the evening of July 20th, the Shanghai Stock Exchange website indicated that Sinochem Equipment Technology (Qingdao) Company Limited (ASX: 600579)'s proposal to issue shares for asset acquisition has been approved by the listing committee.

Details of the Transaction

Specifically, the company intends to issue shares to acquire 100% equity in Yiyang Rubber & Plastics Machinery Group Co., Ltd. and 100% equity in Bluestar (Beijing) Chemical Machinery Co., Ltd. The transaction values are approximately 517.9 million yuan and 683.89 million yuan, respectively. Concurrently, the company plans to raise matching funds of up to 300 million yuan, intended for supplementing the working capital of the listed company or the target companies, or for debt repayment.

The controlling shareholder of the listed company is Equipment Global, with China Sinochem being the indirect controlling shareholder and the State-owned Assets Supervision and Administration Commission of the State Council acting as the ultimate controller. The counterparties in this share issuance for asset acquisition are companies controlled by the indirect controlling shareholder, China Sinochem, making this transaction a connected party transaction according to relevant regulations. Furthermore, this transaction constitutes a major asset reorganization for the listed company.

Profile of the Target Assets

Examining the target assets, Yiyang Rubber & Plastics Machinery's main business is rubber machinery manufacturing, with key products including internal mixers, vulcanizing machines, and extruders. Financially, from 2023 to 2025, its operating revenues were 465 million yuan, 789 million yuan, and 715 million yuan, respectively, with net profits attributable to the parent company of 44.28 million yuan, 64.07 million yuan, and 45.44 million yuan, showing a trend of steady growth in recent years.

Bluestar (Beijing) Chemical Machinery leverages its two core technologies, "electrolysis" and "energy equipment," to provide customers with core equipment, core process packages, and upstream/downstream supporting equipment solutions. It has developed a diverse product portfolio covering chlor-alkali electrolysis units, molten salt energy storage units, and special valves. As a leading domestic enterprise in the chlor-alkali electrolysis unit industry, its operating revenues from 2023 to 2025 were 1.583 billion yuan, 1.001 billion yuan, and 1.32 billion yuan, respectively. Net profits attributable to the parent company were 18.41 million yuan, -11.58 million yuan, and 90.95 million yuan, indicating significant performance volatility.

Contrast with the Listed Company's Performance

In contrast, the listed company has been under performance pressure, reporting net losses for several consecutive years. From 2022 to 2024, the listed company's operating revenues were 10.43 billion yuan, 11.605 billion yuan, and 9.612 billion yuan, respectively. However, net profit attributable to the parent company was negative for three consecutive years, at -1.618 billion yuan, -2.768 billion yuan, and -2.202 billion yuan, accumulating losses exceeding 6.5 billion yuan.

Even after divesting loss-making overseas operations through a major asset reorganization at the end of 2024, turning Equipment Luxembourg into an associate company, its difficulties have not been fully resolved. In 2025, the company's operating revenue was 1.584 billion yuan, a year-on-year decrease of 83.52%; net profit attributable to the parent company was -118 million yuan, a year-on-year increase of 94.63%. Although the loss narrowed year-on-year, the overall loss-making situation persists.

Strategic Rationale for the Acquisition

Against this backdrop, injecting assets for business supplementation and profit adjustment has become one of the strategies for Sinochem Equipment to address the current situation.

From the transaction's perspective, this merger is both an attempt at industrial chain integration and a practice of optimizing resource allocation within the central state-owned enterprise group. As enterprises under the umbrella of China Sinochem, Sinochem Equipment, Yiyang Rubber & Plastics Machinery, and Bluestar (Beijing) Chemical Machinery have a foundation for business synergy. Sinochem Equipment's existing business focuses on chemical equipment and rubber machinery, while the rubber machinery products of Yiyang Rubber & Plastics Machinery and the electrolysis and energy equipment solutions of Bluestar (Beijing) Chemical Machinery could potentially create industrial chain complementarity, further enhancing its business portfolio.