on July 2, China Railway Signal & Communication Co., Ltd. (hereinafter "CRSC") disclosed its letter of intent on IPO and listing on STAR Market , launching its IPO work on the STAR Market, with its proposed issuance up to 1.8 billion shares, accounting for 17% of its total equity after the issuance. It will become the first large central enterprise and A+H share listed company on STAR Market.
According to public records, CRSC's controlling shareholder is China Railway Signal & Communication Group Co., Ltd., and its actual controller is SASAC. The company focuses on the research and exploration of rail transportation control system technology, and strives to provide safe and efficient core technology to support China's rail transportation operation. It provides customers with integrated one-stop services for rail transportation control systems through its proven business model covering design & integration, equipment manufacture and system delivery. Thanks to its operating advantage across the entire industrial chain, CRSC has achieved steady improvement in operating performance in recent years. From 2016 to 2018, its operating income totaled 29.770 billion yuan, 34.586 billion yuan and 40.013 billion yuan respectively, and its net profit reached 3.198 billion yuan, 3.437 billion yuan and 3.717 billion yuan.
According to the prospectus, so far, CRSC's core products and services for urban transit control systems have covered over 80 urban transit lines in China that have started operation or completed bidding, and within the reporting period, its market share approximated 40% in terms of accepted contract amount. By the end of 2018, CRSC's core products and services for high speed railway (HSR) control systems ranks the first in the world in terms of total winning mileage, and its winning mileage coverage has exceeded 60% in terms of accumulated winning mileage of system integration projects for HSR control systems in China.
CRSC has obtained competitive advantage from its outstanding comprehensive capabilities in scientific and technical innovation. As a key promoter of HSRs as China's business card, the company pursues innovation-driven development, and builds on its innovative R&D mechanisms and high-quality R&D staff to promote the applied R&D work of core products and accelerates the commercialization of scientific and technical achievements. By the end of 2018, it has obtained 1,421 registered patents in China. Through independent innovation, CRSC has achieved completely independent intellectual property rights for core train control technology and 100% localization of its products, and become a global industry leader in the automatic control technology for HSRs and marshalling yards of freight railways.
According to the prospectus, CRCS will utilized the funds raised in the IPO for advanced and intelligent technology R&D projects, advanced and intelligent manufacture base projects and IT application projects and as additional working capital. With China's development into a transport power, CRSC has undertaken the mission to advance the national signaling & communication industry to the global arena as a leader in the domestic and global rail transportation control system industry; promote its integration into global competition and accelerates its transformation into a world-class multinational industry group featuring rail transportation control technology by accelerating scientific & technical innovation, and transformation & upgrading; utilizing its advantages across the entire industrial chain; and achieving strategic breakthroughs in industrial & product structure readjustment, historic breakthroughs in core technology, and breakthroughs in the overseas expansion of China's HSR standards and industry.
Before landing on the STAR Market, CRSC was listed on the main board of the Hong Kong Stock Exchange in August 2015, as the fourth largest IPO of the year in Hong Kong. For its listing this time, the company has selected the listing criteria of an expected market value not less than 3 billion yuan, and operating income of the latest year not less than 300 million yuan.
According to public records, as part of A share issuance, some of CRSC’s senior managers and core staff will be included in the security brokers' collective asset management plan, and be involved in the A-share offering strategic placement. There are 572 persons who meet the requirements of and intends to participate in the strategic placement, accounting for 2.98% of on-the-job employees at the end of 2018.