Zhi Tong Cai Jing·2025-12-12 08:56Core Viewpoint - China Metallurgical Group Corporation (China MCC) announced the sale of non-core assets for approximately 60.68 billion yuan, aiming to focus on its core business, but the market reacted negatively, leading to a 21% drop in stock price and a market value loss of over 10 billion HKD [1][5] Group 1: Asset Sale Details - The company plans to sell 100% equity of MCC Real Estate and related debts for about 3.12 billion yuan, and 100% equity of several subsidiaries for approximately 2.94 billion yuan, totaling 60.68 billion yuan [1][2] - The total revenue of the six sold entities from January to July was 12.21 billion yuan, accounting for only 5.1% of the total revenue, with a combined net profit loss of 1.84 billion yuan [2][5] - The sale price represents a significant premium over the net asset value, with a total asset value of 83.64 billion yuan for the sold entities, which is 9.75% of the total assets [2][4] Group 2: Financial Impact - The sale is expected to increase the company's net assets by 11%, with a cash inflow of over 60 billion yuan, enhancing liquidity to support core business development [4][7] - The company has reported a decline in revenue and net profit over the past two years, with a 21.8% drop in engineering contracting revenue in the first half of 2025 [5][6] - The core business, particularly metallurgical construction, has a strong competitive advantage, with significant project contracts exceeding 100 billion yuan in the first half of 2025 [6][7] Group 3: Market Reaction and Valuation - The market's reaction to the asset sale was overly negative, with a significant drop in stock price, but this presents a buying opportunity for long-term investors, as the current price-to-book (PB) ratio is only 0.3, indicating high value potential [8]