上市捷报丨沙利文助力山西省安装集团股份有限公司成功赴港上市(2520.HK)

Shanxi Installation Group Co., Ltd. (Stock Code:2520.HK) on2023year11month22The company successfully listed on the capital market today. It is an engineering service provider headquartered in Taiyuan, Shanxi Province, China, engaged in professional industrial engineering, specialized supporting projects, other engineering services, and non-engineering businesses. Frost & SullivanFrost & Sullivan,Frost & Sullivan, referred to below as 'Frost & Sullivan', provides exclusive industry advisory services for the listing of Shanxi Installation Group Co., Ltd. We hereby extend our warmest congratulations on its successful listing.

Shanxi Installation Group Co., Ltd. (hereinafter referred to as 'Shanxi Installation') was established on2023year11month22The company plans to go public on the 1st of July3.33100 million common shares, with the final issue price being RMB per shareHshare2.18HK$, the net proceeds from the global offering of the Company are estimated to be approximately6.54HK$10 billion.

During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), helping the issuer communicate with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and providing feedback on various industry-related issues from the Hong Kong Stock Exchange for the issuer.

Investment highlights

The company has established an industry position through its independent R&D technology, enabling it to benefit from the national policies for coordinated development in Shanxi, as well as the strong national economy and social situation;

The company possesses specialized business advantages, especially in the current trend of 'carbon peak and carbon neutrality'. The company precisely focuses on transformation and upgrading in green energy conservation, new energy, and other fields, achieving strategic goals for high-quality transformation and development across the entire industrial chain, and making outstanding contributions to improving the ecological environment;

According to a report by Frost & Sullivan, by2022Income for the year,

The company has exceeded500Ranked among the top professional industrial engineering contractors in Shanxi Province1;

The company has exceeded10,000Ranked among the top professional industrial engineering contractors in China5.

Overview of the Professional Industrial Engineering and Supporting Engineering Market

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Professional industrial engineering mainly includes power engineering (thermal power generation, new energy wind power generation, new energy photovoltaic power generation, new energy geothermal power generation, hydrogen power generation, power transmission and transformation); petrochemical engineering (oil and gas storage and transportation, petrochemicals, chemical engineering, pharmaceutical chemicals); mechanical and electrical installation engineering; metallurgical engineering (glass, coking, cement, non-ferrous metals, ferrous metal smelting, carbon, electrolytic aluminum, electrolytic copper, etc.); water conservancy and hydropower engineering (water conservancy projects, hydropower projects, pumped storage); urban rail transit engineering; mining engineering (coal mines, iron mines, aluminum mines, copper mines, etc.). Professional industrial engineering projects also include services such as investment construction, design consulting, construction, operation and maintenance.

Professional supporting projects refer to the design consultation, construction, and operation and maintenance services for municipal public works such as urban roads, bridge projects, thermal power, water supply, gas supply, and communication projects. Professional supporting projects mainly include standardized factories, heating systems, pipeline networks, sewage disposal, agriculture, and road engineering.

Market scale of professional industrial engineering in China and Shanxi Province

Professional industrial engineering generally includes construction related to new energy, petrochemicals, fine chemicals, etc. The design, execution, and procurement of such related construction projects require a high level of professional knowledge to meet the relevant requirements.2017Year-end2022In [year], the Chinese professional industrial engineering market, measured by total output value, grew steadily, with a compound annual growth rate of about8.7%, attributed to(i)The significant growth of the new energy industry and(ii)Energy demand is strong, which is related to the significant development of the national economy. Looking ahead,2023Year-end2027In [year], the total output value of China's professional industrial engineering will be8.0%The compound annual growth rate continues to increase. In the future, the growth in the output value of professional industrial engineering will mainly benefit from the green development priorities mentioned in the Outline of the 14th Five-Year Plan. The outline proposes to widely promote green production and green living, steadily reduce carbon emissions after reaching a peak, and fundamentally improve the environment. Therefore, it will drive the new energy industry and related professional industrial engineering.

With the strong growth in the total output value of specialized industrial engineering in China, the total output value of specialized industrial engineering in Shanxi Province has shown exponential growth.2017Year-end2022The compound annual growth rate for the year is13.0%This rapid growth is mainly due to the vigorous development of the new energy industry. Looking ahead, the total output value of specialized industrial engineering in Shanxi Province will maintain strong growth, with a compound annual growth rate of11.9%.

Source: Frost & Sullivan report

Market scale of professional supporting projects in China and Shanxi Province

Professional supporting projects generally occupy an important position in the development of infrastructure construction, involving but not limited to rail transit heating, pipeline networks, sewage, and roads.(i)China's urbanization process has advanced rapidly in the past few years.(ii)The Chinese government has been continuously increasing investment in fixed assets for supporting professional projects, which2017Year-end2022In [year], the total output value of China's professional supporting projects maintained a steady growth, valued at RMB51,932RMB 100 million, an increase of88,656yuan, with a compound annual growth rate of11.3%and(iii)Government support policies.2021year4Monthly Release of2021With the support of the 'Key Tasks for New Urbanization and Integrated Urban-Rural Development in 2021', to further advance urbanization in China, especially the specialized supporting projects for new urbanization with county towns as an important carrier, it is expected2023till2027The market scale of China's professional supporting projects in 2023 will be about8.1%The compound annual growth rate is increasing. Looking ahead, as(i)The sustained development of the Chinese economy and(ii)With the strong promotion of infrastructure construction, it is expected that the professional supporting engineering industry will grow steadily in the foreseeable future.

Due to(i)The government's policies to promote the renovation of old districts, especially upgrading public facilities such as gas, electricity, drainage, heating, and other supporting infrastructure;(ii)The intensive investment in infrastructure development in Shanxi Province and(iii)Large-scale projects, such as those costing approximately RMB5,000The South-to-North Water Diversion Project, worth hundreds of millions and passing through six provinces including Shanxi Province, commenced in2017Year-end2022In [year], the total output value of professional supporting projects in Shanxi Province increased significantly, from RMB573RMB 100 million, an increase of992yuan, with a compound annual growth rate of11.6%With the strong support of the government's vigorous promotion of urbanization construction, the demand for related infrastructure and the output value of municipal public works will increase accordingly. It is expected2023Year-end2027The output value of professional supporting projects in Shanxi Province in 2023 will be about9.6%Compound annual growth rate increases.

Source: Frost & Sullivan report

Market Drivers and Trends

Positive government policies

In recent years, China's professional industrial engineering market, along with the construction industry, has been supported by a number of government policies.2021year3In the month, the Chinese government promulgated the 14th Five-Year Plan for National Economic and Social Development of the People's Republic of China and2035The 'Yearly Long-Term Objectives Outline' points out the key development of traditional and new infrastructure, the construction of an energy system, and the promotion of coordinated and distinctive development among large, medium, small cities and small towns through the optimization of regional uses in megacities and metropolitan areas. This will enable more people to enjoy a higher quality life in cities. As the foundation for various industrial facilities, civil engineering structures, and public facilities, professional industrial engineering and supporting projects will benefit from new construction projects as well as the maintenance and renovation of existing facilities and structures, thus being continuously driven forward. Therefore, these favorable policies will provide positive growth momentum for the professional industrial engineering and supporting project market in China.

The urbanization process is accelerating

According to data from the National Bureau of Statistics of China, China in2022The urbanization rate reached64.7%The Chinese government recently2021year4Announced in2021"Key Tasks for New Urbanization and Integrated Urban-Rural Development in 2021", which outlines an orderly and effective urbanization process for the rural floating population. Therefore, it is expected that China's urbanization rate will grow steadily, by2026The year will exceed71%In the coming years, with the continuous increase in urban population, the demand for infrastructure construction such as new energy power plants, pumping, pipelines and drainage systems, petrochemicals and other industrial facilities, as well as transportation facilities, will increase. This will drive the growth of China's professional industrial engineering and supporting engineering markets.

Power demand surges

In recent years, due to the acceleration of manufacturing activities, economic development, and unstable weather across the country, electricity consumption has continuously reached new highs, leading to a significant increase in power load. In view of this situation, the government has intensified efforts to promote cross-regional power transmission to meet the surging demand. In addition,2020In the year, the preliminary draft of the 'Energy Law of the People's Republic of China' listed new energy as a priority for energy development. In the same year, the Chinese government formulated 'Several Policies to Promote the High-Quality Development of New Energy in the New Era', proposing alternative measures to obtain electricity, such as solar energy, nuclear energy, and wind energy.2022In [year], China's offshore wind power installed capacity reached28.6 GWIn the long run, the surge in electricity consumption coupled with government initiatives will spur investment in traditional and alternative power supply facilities, thereby increasing China's demand for new energy projects.

Infrastructure develops steadily

In addition to power plants and the power system, in order to adapt to the rapid development of cities, the Chinese government has also emphasized the importance of improving national logistics efficiency. This will also drive the development of various transportation infrastructure such as highways, railways, and subways in response to policies. According to data from the National Bureau of Statistics,2021In [year], the annual growth rate of the total investment in infrastructure development projects was0.4%Therefore, China's market demand for professional supporting projects continues to grow.

China's professional industrial engineering and supporting projects

Market competition landscape

The industry of professional industrial engineering and supporting projects in China is highly fragmented.2022The top 10 participants before the New Year accounted for about1.6%, while China's professional industrial engineering and supporting industry sectors are about20,000Industry participants. The winning bid rate of China's professional industrial engineering and supporting projects is between30%till60%The winning bid rate for other construction projects in China ranges from20%till60%Yu2022In the year, the Group ranked tenth among China's professional industrial engineering and supporting project contractors based on revenue, with a market share of0.1%.

Overview of Market Competition in Professional Industrial Engineering

The professional industrial engineering industry in China is highly fragmented.2022The top 10 participants before the New Year accounted for about1.5%, while China's professional industrial engineering industry is about10,000Industry participants. Yu2022In the year, the Group ranked fifth among professional industrial engineering contractors by revenue, with a market share of0.2%.

Overview of Market Competition for Professional Supporting Projects

The professional supporting engineering industry in China is highly fragmented.2022The top 10 participants before the New Year accounted for about1.9%, while the professional supporting engineering industry in China is about10,000Industry participants. Yu2022In [year], in terms of revenue from China's professional supporting engineering market, the Group's market share was0.02%.

View the prospectus

Frost & Sullivan has extensive research experience in the construction industry and has assisted well-known enterprises in successfully listing on the capital market. Successful listings include: Yiguan Group (2442.HK), Zhongtian Hunan Group2433.HK),GC Construction Group（1489.HK), Fengcheng Holdings2295.HK), Yinghui Holdings2195.HK), Zhi Xin Group2187.HK), Guanglian Engineering1413.HK), Dehe Group0368.HK),Raffles Interior（1376.HK), Xinwei Engineering8676.HK), Yinglan Group1162.HK), Jianzhong Construction0589.HK), Shengxing Holdings1472.HK), Wenyegroup1802.HK), Deyi Holdings9900.HK), Telink Construction6193.HK), Fengcheng Holdings8216.HK),WMCH Global（8208.HK), Huaji Global2296.HK), Wanya Holdings8173.HK), China Tianbao1427.HK),Beng Soon（1987.HK), Yuanda Housing (2163.HK), Anle Project1977.HK), Kun Group924.HK), Pujing International2060.HK), Lejias Holdings1867.HK), Weihong Group Holdings8522.HK), Pipeline Engineering1865.HK),Hon Corp（8259.HK), Hengyi Holdings1894.HK), Bao Yan Holdings8601.HK), Aobang Architecture1615.HK), People and Technology8140.HK), Wanshun Group1746.HK), Leung Chi Tin2262.HK), Tangji (8305.HK), Rongfeng Group Asia8526.HK), Deyi Holdings8522.HK), Aoneng Construction1183.HK), Yingde Holdings8535.HK), Hengyu Group2448.HK),WTGroup8422.HK), Jianpeng Holdings1722.HK), Hebei Construction1727.HK), Shouyi Holdings2227.HK), Yinglan Group8470.HK), Yikangtai8445.HK), Wantong Garden8199.HK), Haobo International8431.HK), and advanced development1667.HK), and development （8423.HK),ECI Technology（8013.HK), Shanle International1660.HK), Li's Enterprise Holdings2266.HK), Aishuo Holdings8341.HK), AEW Construction6189.HK), Kwong Man Keat8023.HK), Fengsheng Electromechanical0331.HK), Koenovode1206.HK), Red Star · Meikailong1528.HK).