Sinotrans Container Lines and Antong Holdings Plan Merger to Create the World's 19th Largest Container Shipping Company

On the evening of May 28, Antong Holdings (600179.SH) and China Merchants Energy Shipping Co., Ltd. (601872.SH) announced a groundbreaking restructuring plan. China Merchants Energy Shipping Co. plans to spin off its subsidiaries, Sinotrans Container Lines Co., Ltd. (Sinotrans Container Lines) and Guangzhou Merchant Roll-on Roll-off Transportation Co., Ltd. (Guangzhou RORO), and achieve backdoor listing through a merger with Antong Holdings.

According to the announcement, China Merchants Energy Shipping Co. currently holds 100% equity in Sinotrans Container Lines and 70% in Guangzhou RORO. Antong Holdings will acquire certain equity interests in these two companies through issuing RMB common shares and possibly paying cash. This transaction constitutes a major asset restructuring and related transaction under the "Administrative Measures for the Material Asset Restructuring of Listed Companies (2023 Revised)".

Upon completion, Antong Holdings will become the controlling shareholder of Sinotrans Container Lines and Guangzhou RORO, while China Merchants Energy Shipping Co.'s shareholding structure remains unchanged.

Although this merger is still in the preliminary planning stage and subject to further due diligence, audits, evaluations, and necessary approvals, it marks a significant step forward for China Merchants Energy Shipping Co. This restructuring allows China Merchants to focus more on bulk, oil, and gas transportation, strengthening its position in these critical markets.

### Synergy under China Merchants Group

Given the current shareholding structure of Antong Holdings, this transaction is expected to generate substantial synergies within the China Merchants Group. Antong Holdings, originally established as Ansheng Shipping in 2004 and listed through a backdoor in 2016, faced operational challenges and underwent judicial reorganization in 2020. Currently, its largest shareholder is Fujian Zhaohang Logistics Management Partnership, primarily controlled by China Merchants Port Holdings and Liaoning Port Group, both under China Merchants Group.

### Enhancing Container Shipping and Roll-on Roll-off Services

Sinotrans Container Lines operates a service network covering major Chinese coastal ports to Japan, Korea, Australia, Southeast Asia, and more. According to Alphaliner, it currently operates 30 ships with a total capacity of 47,678 TEU. On the other hand, Antong Holdings operates 83 ships with a total capacity of 83,008 TEU, ranking 23rd in global liner shipping capacity.

If the merger proceeds, the combined fleet will consist of 113 ships with a total capacity of 130,000 TEU, propelling the new entity to 19th place in the global liner shipping capacity rankings. This merger not only increases scale but also leverages the complementary strengths of both companies, with Sinotrans focusing on international routes and Antong on domestic routes.

Moreover, Guangzhou RORO, a leader in automobile transportation, adds another layer of synergy. With a fleet of 22 roll-on roll-off vessels, Guangzhou RORO has established comprehensive logistics networks across rivers, coastal areas, and international routes, servicing top clients like Mercedes-Benz, BMW, and Tesla.

### Future Prospects

The combined capabilities in container shipping and roll-on roll-off services will significantly enhance Antong Holdings' competitive edge, offering integrated transportation solutions that span sea, land, and rail. This merger aligns with industry trends where major shipping companies are expanding into automobile transportation, a market with growing demand.

Despite the uncertainties and regulatory hurdles, this merger represents a transformative move for China Merchants Energy Shipping Co. and Antong Holdings. If successful, it will not only boost operational scale and market influence but also reinforce China Merchants Group's leadership in the global shipping industry.

Stay tuned for more updates on this exciting development!