--- title: "Fangzheng Securities: How State Capital Participation Reshapes the Construction Industry Landscape" type: "News" locale: "en" url: "https://longbridge.com/en/news/225920696.md" description: "Fangzheng Securities released a research report stating that state-owned capital investment will reshape the construction industry landscape, promote industry clearing, and improve the business of target enterprises. It is recommended to pay attention to the state-owned capital investment process of LYCG and other industry events. Starting from 2024, the tightening of IPOs will make mergers and acquisitions a new financing channel, with state-owned capital playing a leading role, bringing changes such as reduced financing costs and business integration. Taking NB CONSTRUCTION as an example, its financing costs and financial indicators have significantly improved after state-owned capital investment" datetime: "2025-01-23T02:07:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/225920696.md) - [en](https://longbridge.com/en/news/225920696.md) - [zh-HK](https://longbridge.com/zh-HK/news/225920696.md) generator: "portal-rs" --- # Fangzheng Securities: How State Capital Participation Reshapes the Construction Industry Landscape According to the Zhitong Finance APP, Founder Securities released a research report stating that the merger and reorganization of state-owned assets in the construction industry is expected to promote industry clearing, bringing business improvements to target enterprises. It is recommended to pay attention to subsequent events in the industry and actively price existing merger and acquisition matters. After being invested by Ningbo Transportation, Ningbo Construction (601789.SH) has achieved improvements in financing costs, corporate governance, order structure, and financial indicators. In the context of state-owned asset mergers and reorganizations, it is recommended to actively monitor the progress of state-owned equity participation in Longyuan Construction (600491.SH) and subsequent company pricing, as well as event-driven changes in other companies in the industry. ## **The main points of Founder Securities are as follows:** **Tightening IPOs & policy support promote mergers and reorganizations, with state-owned assets playing a leading role** Since 2024, with the tightening of IPOs, mergers and reorganizations have become a new financing channel for some enterprises. Various ministries and local governments have frequently issued documents supporting corporate mergers and reorganizations. State-owned assets currently have better credit levels and lower funding costs, and state-led mergers and reorganizations are expected to become an important driving force for industry consolidation. State-owned mergers and reorganizations of private enterprises in the construction industry are expected to bring changes such as reduced financing costs, business introduction, and reshaping of the landscape. State-owned assets play an important role in the construction industry. During the merger and reorganization process of state-owned assets with private construction enterprises, they can provide three directions of assistance to private enterprises, specifically including improvements in financing, business orientation, and industry-driven clearing. **Ningbo Construction has seen significant business improvements after being invested by Ningbo Transportation** On the transaction side, Ningbo Transportation acquired 29.92% of Ningbo Construction's equity in 2019 through a premium agreement transfer, with a transaction price of 4.25 yuan/share. After the transaction was completed, a chairman and financial director with a state-owned background were appointed; on the financing side, under the promotion of state-owned assets, Ningbo Construction successfully issued 21 bonds/note, with a total amount reaching 6.19 billion yuan; on the business side, state-owned assets mainly introduced orders, improved the company's business qualifications, and integrated and divided the company's business departments; from a financial performance perspective, after the state-owned investment at the end of 2019, Ningbo Construction achieved positive revenue growth from 2020 to 2023, and in 2023, compared to 2019, financing costs decreased from 6.4% to about 4.5%, and financial expenses decreased by about 70 million yuan; in terms of stock price performance, the subsequent stock price remained above the transfer price of 4.25 yuan/share for a long time, reaching a maximum of 8.62 yuan/share, achieving the preservation and appreciation of state-owned assets. **In addition to introducing traditional businesses, Longyuan Construction also has potential in emerging businesses** In 2023, Hangzhou achieved a fixed asset investment of 918.6 billion yuan, while Ningbo reached 779.7 billion yuan. As a provincial capital, Hangzhou has greater fixed asset investment potential. Additionally, due to the company's historical business scale being close to 20 billion yuan, the company has the capability to operate large-scale construction projects. **Key areas to focus on include vehicle-road cloud, road operation and maintenance, low-altitude economy, and water conservancy construction** According to estimates, the future smart road renovation in Hangzhou will be the largest expenditure item, with costs potentially reaching hundreds of billions, specifically for smart intersections, smart parking spaces, smart road construction, etc. The company to be acquired, Hangzhou Transportation Investment, is one of the main implementing units of the Hangzhou vehicle-road cloud project and is expected to receive orders; Hangzhou Transportation Investment holds approximately 898 kilometers of highway assets in Hangzhou, with future operation and maintenance potential of about 360 million yuan/year; In addition, it is expected that Hangzhou plans to complete water conservancy investment of 10 billion yuan by 2025, and LYCG also has incremental business space. **Risk Warning:** The risk of mergers and acquisitions not meeting expectations, intensified competition risk, and the risk of orders not landing as expected ### Related Stocks - [600491.CN](https://longbridge.com/en/quote/600491.CN.md) - [601789.CN](https://longbridge.com/en/quote/601789.CN.md) - [601668.CN](https://longbridge.com/en/quote/601668.CN.md) - [002410.CN](https://longbridge.com/en/quote/002410.CN.md) - [002062.CN](https://longbridge.com/en/quote/002062.CN.md) - [601901.CN](https://longbridge.com/en/quote/601901.CN.md) - [603280.CN](https://longbridge.com/en/quote/603280.CN.md) - [002375.CN](https://longbridge.com/en/quote/002375.CN.md) - [002271.CN](https://longbridge.com/en/quote/002271.CN.md) - [002421.CN](https://longbridge.com/en/quote/002421.CN.md) - [002667.CN](https://longbridge.com/en/quote/002667.CN.md) - [600729.CN](https://longbridge.com/en/quote/600729.CN.md) ## Related News & Research - [Skanska wins USD 85 million add-on contract for Florida Gulf Coast University building in Fort Myers](https://longbridge.com/en/news/297127888.md) - [Trump signs order banning some foreign equipment from U.S. energy grid](https://longbridge.com/en/news/297082422.md) - [Kaleidex acquires Accutool, Lisnabrin in Ireland expansion push](https://longbridge.com/en/news/297164768.md) - [Waberer’s says logistics segment GHG intensity per revenue falls 6% in 2025](https://longbridge.com/en/news/297146341.md) - [EXM: Net profit increased on one-off gains, despite lower revenue and EBITDA year-over-year](https://longbridge.com/en/news/296991766.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**