Recently, the reporter learned from the Shandong State-owned Assets Supervision and Administration Commission that due to the reorganization of Weichai Holding Group and Shandong Construction Machinery Group Co., Ltd. (hereinafter referred to as "Shangong Group"), Shantou, the largest bulldozer manufacturer in China, The controlling right of 000680.SZ) is expected to be transferred to the power of Weichai Power (000338.SZ), which is also affiliated with Shandong SASAC. “The background of this restructuring is to accelerate the merger and reorganization of major industries such as construction machinery, auto parts and steel, and to accelerate the optimization and upgrading of the state-owned economy's distribution structure,†said the insider of the Shandong State-owned Assets Supervision and Administration Commission. At present, Shantui holds a controlling stake in Shangong Group, which is wholly owned by the Shandong State-owned Assets Supervision and Administration Commission. Weichai Holdings, the controlling shareholder of Weichai Power, is also wholly owned by Shandong State-owned Assets Supervision and Administration Commission. Weichai Holding Group also owns another subsidiary. Shenzhen City listed company Shandong Juli (000880.SZ). In fact, as early as December 2008, the market began to rumors that Weichai Power intends to acquire Shantui shares. At that time, the reporter once specifically called Shandong SASAC and Weichai Holdings, and neither of them gave a positive response. On March 4th this year, Shandong Province issued a draft of the “Adjustment and Revitalization Plan for Shandong Automotive Industryâ€, which clearly stated that “we must support the joint reorganization of Weichai Power, Shandong Automobile Group, and Shandong Construction Machinery Group†to cultivate 8-10 large-scale enterprise groups with strong competitiveness, including two companies with operating revenue exceeding RMB 100 billion. At present, the construction machinery industry in Shandong Province has such industry leaders as Weichai Power, China National Heavy Duty Truck Group, Shangong Group, and Shantu Agricultural Equipment; among which the ShanGong Group, in addition to holding shares in Shantui, a listed company, controls Shandong. Linggong Construction Machinery, Shandong Zhongyou Construction Machinery, Shandong Shantui Machinery, Taian Hoisting Machinery and Shangong Investment. On March 11, Shantui announced that the company was identified as the second batch of high-tech enterprises in Shandong Province in 2008, which means that the company will enjoy a preferential tax rate of 15% on income tax for 2008-2010. According to the reporter's understanding, as part of Shantui’s subsidiary companies continue to enjoy preferential income tax policies for the two exemptions and three penny reduction joint ventures, Shantui’s comprehensive income tax rate for the first three quarters of 2008 was approximately 23%. Estimates from Haitong Securities show that after obtaining a 15% income tax benefit, the company’s comprehensive tax rate will drop to around 20%, and it is expected that “income tax incentives will increase company performance by 3.75%â€. According to the reporter’s statistics from relevant personnel of the Shandong Provincial State-owned Assets Supervision and Administration Commission, Shantui’s bulldozers sold more than 360 units in February, of which domestically sold 260 units and exporting 100 units increased the sales volume to the December 2008 sales level. In the first week of March, the company’s bulldozer sales totaled more than 100 units. According to this trend, overall sales are expected to be around 530 units in March, which means that the company’s bulldozers are expected to sell around 1,100 units in the first quarter of this year compared to 2008. It fell by about 10%. Obviously, under the background of the apparent decline in export sales, the company’s good sales performance mainly comes from domestic demand. The start-up of infrastructure projects on the industry has, to a certain extent, compensated for the decline in export sales. According to Wang Hexu, a research fellow in the Ping An Securities Industry, although the export of bulldozers fell sharply by more than 20% in 2009, the total sales volume is still close to last year's level due to a sharp increase in domestic sales of more than 20%; in contrast, earthmoving machinery is also used. Excavator and loader sales in 2009 will decline by about 30%. After the completion of the reorganization of Weichai Holdings and Shangong Group, Weichai Power can use this to expand its business scope to the upstream machinery industry. In fact, Sangong Group, which has occupied the market share of the loader, was also a major customer of engineering machinery for Weichai engines. The current construction machinery engine products bring the company 40% of revenue and 30% of net profit. According to the latest estimates of Guosen Securities in mid-February this year, Weichai Power expects the EPS per share for 2008-2010 to be 2.42 yuan, 1.91 yuan and 2.65 yuan (after deregulation on December 16 last year). As of March 11, Weichai Power A shares and H shares closed at RMB 27.46 and HK$14.38 respectively. 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