China Shipbuilding will use IPO funds to build or expand 22 projects. [China Daily]
China Shipbuilding Industry Co, the nation's largest maker of vessel equipment, plans to raise at least 6.4 billion yuan selling shares as China tries to pare its reliance on Japanese and South Korean marine engines.
The company will use the Shanghai IPO funds to build or expand 22 projects, boosting its capacity to make engines and other parts, according to a stock exchange statement yesterday. The price range for the sale, comprising as many as 1.995 billion shares, or a 30 percent stake, will be announced on Dec 3.
Chinese companies have raised 141.5 billion yuan in mainland initial public offerings this year, 37 percent more than in the whole of last year, as a State stimulus helps the nation's economy weather a global recession.
The government wants locally made components to account for 80 percent of Chinese-made vessels by 2015, as part of a wider drive to surpass South Korea as the world's biggest shipbuilding nation.
"In the mid and long-term, China Shipbuilding will benefit from the government's push to develop the local industry," said Zhou Fengwu, an analyst at Orient Securities Co.
"At present though, the ship-equipment industry is in the same boat as the shipbuilders, which are all suffering from falling orders."
The nation's new-ship orders fell 70 percent to 16.9 million deadweight tons in the first nine months, according to the China Association of National Shipbuilding Industry, as the global recession and slumping trade damped demand. The total backlog stood at 192.4 million deadweight tons at the end of September, down 6 percent from the beginning of the year, according to the group.
Calls to China Shipbuilding went unanswered. China International Capital Corp will manage the stock offering. The shares will be sold to institutional investors on Dec 4 and retail investors on Dec 7.
Chinese shipbuilders delivered 23 million tons in the first nine months, compared with 20.7 million tons for the whole of 2008. China's ship-equipment makers reported a 43 percent increase in industrial output to 43.8 billion yuan in the period, according to the association.
China Shipbuilding has benefited from government subsidies, which accounted for 21 percent of profit in the first half. Last year, net income rose 52 percent to 1.22 billion yuan, the statement said. Sales jumped 41 percent to 16.1 billion yuan.
Global shipbuilding contracts fell 85 percent in the first nine months, according to Clarkson Plc, the world's largest shipbroker. South Korea and China won 88 percent of those orders.
The two nations hold 73 percent of the total global ship-order backlog, according to Clarkson.
