State-owned building firms plan revamp

Shares in related companies see sharp fluctuations after reports about ongoing restructuring proposal

State-owned China National Materials Group Corp is holding restructuring negotiations with China National Building Materials Group Corp, another State-owned firm, according to a regulatory filing.

Ningxia Building Materials Group, a listed company owned by China National Materials Group said in a statement that the reorganization proposal is yet to be finalized and the plan still needs to be approved by relevant authorities. It did not provide any further details about the proposal in its statement.

Reports of the restructuring, however, pushed up Ningxia Building shares by 7.56 percent to 10.24 yuan ($1.56) on Tuesday. The rise came despite a 6.42 percent fall in the benchmark index which sent the prices of several shares tumbling.

China National Materials Group also owns Sinoma Energy Conservation Ltd, whose shares surged by the maximum daily 9.99 percent limit on Tuesday. Besides, China National Building Materials Group owns other building material companies like China Jushi Co Ltd and Ruitai Technology. Their shares dropped on Tuesday at close, but still lesser than most of their peers.

Ningxia Building Materials Group said the reorganization plan will not impact the company's major asset restructuring and not have any significant impact on daily operations and business activities.

According to data provided by Wind Information, a market consultancy, about 150 public companies in China incurred losses last year, with State-owned companies bearing the brunt.

"The State-owned companies that experienced a loss were actually very competitive when they initially went public. The main reason for their losses is the changes in the economic environment and a slowing economy. This indirectly reflects the importance and urgent need for restructuring State-owned firms," said economist Song Qinghui, according to Beijing-based caixin.com.cn.

"In the wake of the merger between CSR Corp and CNR Corp, the two State-owned train makers, mergers and reorganizations of State-owned enterprises have become a hot topic," he said.

Founded in 1984, China National Building Materials Group is China's largest national building materials company. Its businesses include scientific research, manufacturing, circulation, logistics and trade.

China National Materials Group was founded in 1983, and is the second-largest domestic building materials enterprise.