Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

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.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Guangzhou Shipyard Declines After Plan to Sell New Shares

June 25 (Bloomberg) -- Guangzhou Shipyard International Co., a unit of the nation’s biggest shipbuilder, slumped the most in more than four years in Hong Kong trading after unveiling plans to sell new shares and buy a shipyard.

Guangzhou Shipyard plunged 18 percent to close at HK$5.87 in Hong Kong trading, the most since Oct. 27, 2008, while the stock in Shanghai fell 7.3 percent. Shares of the Guangzhou, southern China-based company resumed trading today after being halted since May 13.

The shipbuilder plans to sell as much as 2.5 billion yuan ($407 million) of shares to investors including its parent, China State Shipbuilding Corp. and buy a shipyard part-owned by the parent, it said after the market close yesterday. The shipping industry is suffering from falling orders and rates.

“The shipbuilding sector has been depressed for a long time and it seems there’s no light at the end of the tunnel,” Xu Minle, an analyst at Bank of China International Ltd. in Shanghai, said by phone today. “Investors don’t see any positive catalyst in the deals,” said Xu, who has a buy rating on the Hong Kong-traded stock.

The order book at China’s shipyards fell 23 percent at the end of May from a year earlier, according to data from the China Association of the National Shipbuilding Industry, as a glut of ships and reduced freight rates saps demand for shipbuilding.

The Baltic Dry Index, a gauge of costs to transport minerals and grains by sea, has averaged 868 in the past 12 months, falling from 1,343 a year earlier.

China State Shipbuilding will buy at least 2 billion yuan of the new shares, Guangzhou Shipyard said.

Guangzhou Shipyard will use as much as 1 billion yuan from the placement to buy CSSC Guangzhou Longxue Shipbuilding Co. from the parent and its partners, according to the filing. The company plans to use the remaining proceeds as working capital.

Longxue is the biggest builder of modern large vessels in southern China, with annual capacity of 3.5 million deadweight tons, Guangzhou Shipyard said in the statement.

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

Please upgrade your Browser

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

Chrome, Firefox, Safari, Opera or Internet Explorer.