Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Rongsheng Heavy Tumbles After Profit Decline: Hong Kong Mover

China Rongsheng Heavy Industries Group Holdings Ltd., the biggest Hong Kong-listed shipbuilder, fell the most in two weeks in the city after second-half profit plunged 59 percent because of delivery delays.

The shipyard dropped 8.1 percent, the most since March 6, to HK$2.17 at close of trading. The benchmark Hang Seng Index fell 0.2 percent.

Second-half profit tumbled to 504 million yuan ($80 million), from 1.2 billion yuan in the first six months, based on annual results announced yesterday, after the shipyard only delivered one mega-commodity vessel to Vale SA. The Shanghai-based company also predicted that the shipbuilding market will remain “weak” this year as overcapacity in the global fleet damps demand for new vessels.

The second-half “profit collapse is the story,” Barclays Capital analyst Jon Windham said in a note to investors. “The existence of better capitalized, cheaper peers makes China Rongsheng ‘a pass’ for us at the current levels.”

The shipyard may even have had a second-half loss, assuming a 1.2 billion yuan subsidy booked in the annual results was evenly divided across the year, Windham said.

The company plans to issue as much as 3.6 billion yuan of three-year notes in China, it said in a separate statement today. It will sell 2 billion yuan of debt in the first tranche to raise working capital and repay some loans.

Cash and cash equivalents were 6.3 billion yuan as of Dec. 31, down from 10.4 billion yuan a year earlier, the company said. Short-term borrowings rose to 15.4 billion yuan from 9.5 billion yuan as at the end of 2010.

Sea Trials

Rongsheng also plans to deliver as many as ten 400,000 deadweight-ton ships to Vale this year, Chief Executive Officer Chen Qiang told reporters in Hong Kong yesterday. The first of these will be handed over soon and the next is under going sea trials, he said.

The shipbuilder’s full-year net income rose 0.1 percent to 1.72 billion yuan, according to a Hong Kong stock exchange filing. Its shares have plunged 69 percent in the past year, compared with a 8 percent drop for the Hang Seng Index. The company expected to deliver eight VLOCs last year, according to its 2010 initial public offering prospectus.

Rongsheng won orders for a total of 16 VLOCs from Vale and Oman Shipping Co. The ships were part of Rio de Janeiro-based Vale’s plans to pare the cost of shipping iron ore to China, its biggest customer. The miner has so far only made one delivery to China with a VLOC amid opposition from Chinese shipowners contending with slumping rates. The government has also tightened rules for ports handling VLOCs, citing safety concerns.

Vale Chief Executive Officer Murilo Ferreira said on a conference call last month that the delays are mainly being caused by “technical restrictions” and the company expects to eventually gain access to Chinese ports.

Calls to Vale’s China spokeswoman Carolyn Tang today went unanswered.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.