Sinochem Equipment: Divestment, Focus, and M&A Drive Professional Integration to Restructure Core Business Competitiveness

January 10thSinoChem EquipmentA series of announcements, including the "Preliminary Plan for Issuing Shares to Purchase Assets and Raise Supporting Funds in a Connected Transaction," were released. Following the announcement, the company's stock price quickly saw a positive response—on the first trading day (January 12), it hit the daily limit shortly after opening, with trading volume significantly increasing to 151 million yuan. In the subsequent trading days, stock trading remained active, with daily average trading volume consistently exceeding 100 million yuan.

The market's positive response stems from the recognition of the underlying strategic logic behind the transaction. ChemChina Equipment's planned acquisition of 100% equity in Yiyang Rubber & Plastics Machinery Group Co., Ltd. and Bluestar (Beijing) Chemical Machinery Co., Ltd. is not an isolated action, but rather a continuation and deepening of the company's series of strategic initiatives in the past two years. Looking back, since ChemChina Equipment divested its long-term loss-making plastics machinery business through a major asset restructuring at the end of 2024, achieving a "light start," it has clearly focused its main business on two major sectors: chemical equipment and rubber machinery. Subsequently, through internal integration actions such as the absorption and merger of ChemChina (Fujian) Rubber & Plastics Machinery Co., Ltd., the company further optimized its management structure and streamlined resource allocation, laying a solid foundation for the deep cultivation of its core business.

From divesting loss-making assets to integrating internal businesses, and now initiating acquisitions of high-quality external assets, the new management of Sinochem Equipment has demonstrated a clear and coherent strategic roadmap: steadfast structural adjustments to continuously fortify its core business, coupled with synergistic acquisitions to enhance the completeness of its industrial chain and market competitiveness in core areas. This series of actions collectively aims at the company's strategic goal of "becoming a premium integrated service provider for chemical and new materials equipment in the industry." The effectiveness of subsequent integration and the pace of strategic advancement will be critical benchmarks for whether the company's long-term value can be realized.

Complete strategic restructuring and focus on core business to move forward unburdened.

At the end of 2024, Sinochem Equipment divested its controlling stake in KraussMaffei Group, a perennially loss-making wholly-owned subsidiary of its wholly-owned subsidiary Equipment Luxembourg, via a debt-for-equity swap. This changed KraussMaffei Group from a wholly-owned subsidiary consolidated within the financial statements to an associated company, thereby removing it from the scope of the listed company's consolidated financial statements. This effectively resolved the potential risk of a delisting warning due to negative net assets. This move also marked the formal divestiture of the plastics machinery business, once one of the company's three core businesses, clearing the biggest obstacle for the company's subsequent strategic transformation.

It is understood that in recent years, KraussMaffei Group has been continuously incurring losses due to multiple factors, including a period of sluggish demand in the high-end injection molding market in Europe and the United States, high supply chain costs, and insufficient capacity utilization of new factories, which has severely eroded the overall profits of the listed company. This divestiture not only allows ChemChina Equipment to completely shed this biggest performance burden, but also substantially optimizes its financial structure.

The announcement reveals that following the completion of asset divestiture at the end of 2024, ChemChina Equipment's total liabilities significantly decreased from 15.046 billion yuan at the end of the third quarter to 2.104 billion yuan. Simultaneously, the debt-to-asset ratio dropped to 55.68%, a 26.7 percentage point decrease compared to 2023, resulting in a significant optimization of the asset structure. After the transaction, the equity attributable to shareholders of the parent company increased substantially, significantly strengthening the overall asset quality and risk resistance. Concurrently, the business structure was further streamlined, with the main business officially focusing on the more promising and competitive chemical equipment and rubber machinery sectors, laying a solid foundation for resource allocation and long-term development of core businesses.

According to the company's 2025 semi-annual report, after divesting loss-making assets, management was able to fully focus on its core business development. Through a series of quality and efficiency improvement measures such as synergistic marketing, procurement cost reduction, and lean production, the main business has achieved stable operations. In the first half of 2025, the company secured new orders totaling 723 million yuan, demonstrating year-on-year growth in order volume. The market has fully acknowledged its development strategy after refocusing on its core business. Furthermore, according to the company's latest 2025 annual performance forecast, ChemChina Equipment's net profit attributable to shareholders is expected to be between -167 million yuan and -111 million yuan for 2025. Although the net profit attributable to shareholders has not yet turned positive during the reporting period, it represents a significant reduction in losses compared to the net profit attributable to shareholders of -2.201 billion yuan in the previous year. With the substantial improvement in performance, the results of the company's strategic transformation continue to become prominent.

Solidify the foundation of rubber machinery business, expand leading advantages through collaborative mergers and acquisitions.

Following the divestiture of loss-making assets and the completion of business focusing, to further strengthen the management and control of advantageous businesses, Sinochem Equipment announced on January 1, 2026, its intention to absorb and merge its wholly-owned subsidiary, Sinochem (Fujian) Rubber & Plastic Machinery Co., Ltd. Upon completion of this absorption and merger, Sinochem Rubber Machinery's independent legal person status will be cancelled, and all of its assets, liabilities, equity and related businesses will be legally inherited by the listed company. As Sinochem Rubber Machinery is a wholly-owned subsidiary of the company, its financial statements have already been included in the listed company's consolidated scope. This absorption and merger will not have a substantial impact on the company's financial situation, and its core purpose is mainly to achieve streamlining and efficiency improvement in management and business synergy upgrades.

Having completed the optimization of its internal management system, Sinochem Equipment immediately initiated the next step of industrial integration. As another key action in the company's rubber machinery sector business integration, the acquisition of 100% equity of Yiyang Rubber & Plastics Machinery Co., Ltd., announced on January 10th, has become a strategic move for Sinochem Equipment to strengthen the competitiveness of its main rubber machinery business and improve its product chain.

According to reports, Yiyang Rubber Machinery is a key enterprise in the rubber machinery industry. Its main products include internal mixers, tire curing presses, and plate vulcanizers. It boasts multiple high-end R&D platforms, such as a national-level enterprise technology center. After nearly fifty years of development, the company has established significant advantages in the research, development, and manufacturing of large and heavy-duty rubber machinery. Its products cover various domestic industries and are exported to over 40 countries and regions worldwide.

Industry insiders point out that this acquisition of Yiyang Rubber Machinery holds multiple strategic significance for Sinochem Equipment: The most direct benefit is the infusion of continuously profitable high-quality assets, thereby boosting the listed company's performance and strengthening its industrial competitiveness in the rubber machinery sector. The deeper value lies in achieving strategic complementarity in products and technologies. The company's existing advantage in tire vulcanizing machines, combined with Yiyang Rubber Machinery's strong capabilities in upstream key equipment such as large-capacity internal mixers, will form a complete equipment chain covering core process flows, significantly enhancing its synergistic ability to provide integrated solutions. Furthermore, this transaction is a crucial step in fulfilling the controlling shareholder's commitment to resolve horizontal competition, demonstrating the standardization of corporate governance and showcasing the management's strategy and determination to strengthen the main business through systematic operations. This series of closely linked actions also reflects the company's systematic improvement strategy of gradual progress and solidifying its core business.

Specialized integration strengthens the main business, responding to policy guidance to achieve industrial upgrading.

While comprehensively promoting the in-depth layout of the rubber machinery business, Sinochem Equipment also achieved a key reinforcement of its chemical equipment sector through the acquisition of BOHAI MACHINE.

According to reports, Beihua Machinery, which is to be acquired in this announcement, is one of only three complete ion-exchange membrane electrolyzer suppliers globally. It boasts an annual production capacity of 3 million tons of complete chlor-alkali plants and a combined 120,000 square meters of cathodes and anodes. Its technical strength and industrial scale rank among the top globally. By the end of 2024, its market share in the domestic chlor-alkali plant sector was close to 50%, and its international market share exceeded 20%. Currently, the company's business has expanded to over 20 countries worldwide, with products distributed in major markets such as North America, Europe, South America, and Southeast Asia, demonstrating significant international competitiveness.

As a national-level manufacturing single-item champion enterprise under Sinochem Equipment, Tianhua Institute boasts over six decades of technological expertise in the chemical equipment sector. It has built a solid technological advantage in critical industries such as petrochemicals, coal chemicals, and new materials, with its business covering the entire chemical equipment industry chain from R&D and design to manufacturing and service. Following the acquisition of Beihua Machinery, the listed company's technological reserves and product matrix in the chemical equipment field will be significantly expanded. Simultaneously, Tianhua Institute's system solution capabilities, combined with Beihua Machinery's global leading edge in electrolyzer technology, are expected to unleash strong synergistic effects in strategic emerging fields such as green chemicals and new energy materials. This move will drive the company's transformation and upgrading from a specialized equipment supplier to a comprehensive service provider covering a broader industrial chain.

From a top-level architectural perspective, Sinochem Equipment's series of asset integration operations around its core business, in addition to business-level integration and upgrading, also highly align with the current policy orientation of the capital market. In 2024, the China Securities Regulatory Commission (CSRC) successively issued policy documents such as the "Opinions of the CSRC on Strengthening the Supervision of Listed Companies (Trial)" and the "Opinions on Deepening the Reform of the Listed Company Mergers and Acquisitions Market," proposing to support listed companies in enhancing investment value through mergers and acquisitions, and taking multiple measures to invigorate the M&A market. It also explicitly stated that it will actively support listed companies in conducting M&A around strategic emerging industries and future industries. Meanwhile, at the Central Enterprise Responsible Persons Meeting held in December 2025, the deployment of key tasks for 2026 also clearly stated that state-owned enterprises (SOEs) and central enterprises will vigorously promote strategic and specialized restructuring and high-quality mergers and acquisitions, releasing key signals for SOEs and central enterprises to stabilize operations, improve quality and efficiency, and adhere to scientific and technological innovation and application transformation.

From a policy perspective, this series of actions, including the merger and acquisition, represents not only Sinochem Equipment's initiative to enhance its own operations but also a concrete practice of the company responding to regulatory calls and aligning with the direction of central state-owned enterprise (SOE) reform. On the one hand, by injecting high-quality assets that are highly synergistic with its core business, the company has directly improved its asset quality and sustainable profitability, which is a direct manifestation of implementing the requirement to "enhance investment value." On the other hand, the high-end ion-membrane electrolyzer sector, to which the target asset BEW (Beijing Chemical Machinery) belongs, directly serves...Chlor-alkali industryThe energy-saving renovation and strategic emerging industries like hydrogen and energy storage are in line with the policy encouragement for M&A and restructuring centered around "strategic emerging industries." If the subsequent progress is smooth, the company's current acquisition, along with a series of previous asset restructurings, is expected to become a typical case of a central state-owned enterprise-controlled listed company using the capital market for "strategic and professional restructuring and integration."

Develop a three-year shareholder return plan to institutionalize commitments and demonstrate confidence in development.

In addition to the aforementioned asset integration moves focusing on the core business, Sinochem Equipment also simultaneously advanced a series of key adjustments in improving corporate governance structure and clarifying long-term return mechanisms. On December 31, 2025, Sinochem Equipment announced that its board of directors had approved the "Proposal on Appointing the General Manager of the Company" and agreed to appoint Zhang Chi as the General Manager of the Company. This management adjustment is regarded by the market as an important measure for the Group to strengthen the overall leadership of listed companies' businesses and improve the efficiency of strategic execution, with the core aim of promoting the efficient implementation of the company's established reform and development plan.

From divesting loss-making assets to promoting the integration of internal and external resources, a series of measures fully demonstrate the new management team's strategic determination and efficient execution in reshaping the company's development landscape, and further strengthen the market's positive expectations for the company's continuous improvement in operating efficiency and quality, and its efforts to strengthen and optimize its core business. These systematic arrangements, spanning the full dimensions of capital operation, industrial operation, and corporate governance, have laid a solid foundation for the company's medium- and long-term development.

Concurrently, to establish and improve a stable and sustainable investor return mechanism, Sinochem Equipment simultaneously released its "Shareholder Return Plan for the Next Three Years (2026-2028)" on January 10th of this year. The plan clearly states that the company will adhere to the principle of profit distribution primarily through cash dividends. For the next three years, the annual cash dividend ratio will not be less than 20% of the distributable profits achieved in that year, and interim dividends will be implemented in a timely manner based on actual operating development. This plan not only fully demonstrates the company's firm confidence in future profit growth but also institutionalizes the governance philosophy of respecting reasonable shareholder returns and pursuing sustainable corporate development. It holds significant importance in stabilizing market expectations and enhancing investor confidence. Looking ahead, with the steady implementation of the company's strategic layout and continuous improvement of its governance system, and backed by the strong industrial resource support of its central state-owned enterprise shareholder, Sinochem Equipment is expected to steadily advance towards its established strategic goals and continuously unleash its development potential amidst the new landscape of industry transformation and upgrading, and evolving market demand.