A portfolio investment SVA transformation billion strategic downsizing

May just be a coincidence, 2006 ranking of the top 100 electronic announced only a week, by the year fifth slipped to eighth place in the SVA Group Company announced a joint venture and the adjustment scheme of a series of dazzling, the transition to the TFT-LCD industry, there is no more urgent mentality. But the balance sheet of its listed companies can be seen, to complete this transformation may rely on the outside world billions of dollars of large-scale input.

In June 9th, Japan Daiwa Securities SMBC SVA NEC announced to inject $25 million, for the expansion of TFT-LCD production line, this is the first investment in mainland securities and Chinese manufacturing enterprises; a day earlier, SVA G (600637.SH) announced the 7 companies to sell its stake; and this, SVA has with Nippon electric glass sub company and American Cadence company in TFT-LCD industry chain has signed a joint venture project.

Combination fist

"This is the first time to SVA overseas financial industry cooperation." SVA Group Vice President Jiang Songtao said. Japan Daiwa Securities SMBC service and service representative Ban Ban Ji Liuzhen told reporters: "we will use their own experience, to provide support for the SVA NEC."

According to the agreement, Daiwa Securities SMBC to SVA NEC $25 million. After the completion of the capital, Daiwa Securities SMBC has become a new shareholder SVA NEC, SVA NEC registered capital will reach 71 billion 480 million yen, of which its SVA SVA optoelectronics invested 75%, NEC invested 21.36%, Daiwa Securities SMBC share the remaining shares.

It is understood that in the joint venture, Daiwa Securities SMBC SVA Group will also serve as a financial advisor, providing comprehensive support services for the radio and television management strategy, financial strategy planning and implementation.

Injection of funds will be mainly used for the expansion of its production line. Jiang Songtao said, according to the SVA NEC previously planned, the year from an annual output of 540 thousand large production capacity will be expanded to an annual output of 1 million 20 thousand large.

At the same time, SVA's other companies are accelerating the contraction front.

In June 8th, G radio announcement said: "according to the January 17, 2006 Eight meeting of the board of directors of the fifth resolution, the company intends to hold the Shanghai radio and television broadcasting group to sell real estate company seven stake in enterprises."

The specific scheme is: "to Shanghai SVA (Group) Limited company subordinate state-owned enterprises Shanghai broadcasting Assets Management Corporation, the transfer of ownership of enterprises to adjust to 4: Shanghai broadcasting real estate company 25%, China Hualu Information Industry Co. Ltd., 8% Beijing investment Cci Capital Ltd and 23.5% new technology venture Shanghai Guangxin Motor Co. Ltd. Asahi 32% equity."

At the same time, intends to hold shares of Shanghai radio and television foreign technology cooperation Co., Ltd. and other five companies through the Shanghai United Assets and equity exchange listing transfer".

The transfer of listed companies and some losses because of facing liquidation, such as Shanghai chenmei Electronic Co. Ltd., "due to poor efficiency, as of December 31, 2005 the cumulative loss of 1 million 206 thousand yuan, in January this year -4 month also appeared in a loss of 30 thousand yuan." But more is due to the company's corporate restructuring strategy planning and the actual needs of the survival and development of the enterprise transfer or listing.

Transition acceleration

Dealing with other assets is to accelerate the transformation of the TFT-LCD industry." A senior SVA said.

In the view of SVA Group President Gu Peizhu, along with the pressure of competition in the industry continue to increase, SVA must find more stronger partners. Gu Peizhu told reporters that the joint venture partner TFT-LCD second production lines are being carried out in full swing.

According to reports from the SVA sources, there have been a Japanese giant TFT-LCD has been basically determined will participate in the joint venture, another is still in negotiations. Second TFT-LCD production lines after the market has been rumored SHARP will participate in the construction of the radio.

According to the plan, SVA, Shanghai Guangdian Electronic Co Ltd shareholders SVA NEC investment will be mainly responsible for the middle products LCD panel products and take part in the upstream enterprises; Affiliate Electronics (600602.SH) will participate in the upstream holdings joint venture investment, and other investment products, plasma OLED; manufacturing and marketing another affiliate of SVA will be in charge of downstream products.

In fact, to accelerate the transformation of the TFT-LCD industry has become a consensus within December 8, 2005, SVA SVA, held a special meeting to listen to the overall transformation, the McKinsey report. The report suggested that SVA must manufacturing enterprises from traditional home appliances, change to the TFT-LCD industry as the core of the enterprise.

With the Shanghai city to determine the flat panel display industry base construction will be more than radio, SVA internal also accelerated the pace of industrial transformation to TFT-LCD. In April 18, 2006, SVA held internal meetings, clear TFT-LCD industry as the core industry in the future development of the group.

Funding path

The funds may become the biggest obstacle to the transformation of radio and television.

Although the current SVA is to last sixth or seventh generation TFT-LCD production line, is not conclusive, but from the media had reported that, if the current SVA before a fifth generation to the seventh generation TFT-LCD production line of at least 1 billion -40 billion dollars in capital investment.

The disclosure of listed companies from the SVA balance sheet can be seen, G electronics and G SVA funds chain is very tight.

In G