Hudong may buy more assets from parent
Updated: 2007-07-30 08:40
Hudong Heavy Machinery Co, the listed vehicle of China’s biggest shipbuilder, may buy more shipbuilding assets from its parent as it speeds up expansion to meet robust demand, its president said Friday.
Assets Hudong Heavy might purchase from China State Shipbuilding Corp(CSSC) include a shipyard on Changxing island near Shanghai, Yang Jiafeng said on the sidelines of a shareholders’ meeting.
The facility, with annual production capacity of 4.50 million deadweight tons, is scheduled to deliver its first two vessels before the end of the year.
“It could start to make a profit in three years. We are very likely to take it over from CSSC by then,” Yang said.
Two weeks ago, Hudong Heavy, originally a ship engine maker, obtained regulatory approval to purchase 12 billion yuan (US$1.59 billion) worth of shipbuilding assets, including Waigaoqiao Shipbuilding Co., mostly from its parent via a share placement deal.
Yang, however, ruled out immediate plans to take over two other major shipbuilders from CSSC, Jiangnan Shipyard (Group) Co. and Hudong Zhonghua Shipbuilding (Group) Co., as some of their vessels are used for military purposes.
Shares in Hudong Heavy, which plans to change its name to China State Shipbuilding Co., have more than quadrupled in value since the start of the year, compared with a gain of about 60 percent in Shanghai’s benchmark share index. They were suspended from trade Friday.
Domestic shipbuilders, whether State-owned or privately run, have been reaping strong profits in recent years as shipping liners worldwide race to expand their fleets and take advantage of booming global trade.
In the first quarter, Hudong Heavy’s net profit jumped 70.98 percent to 101.02 million yuan on robust demand for ship engines.
Its first-half earnings, scheduled to be announced Aug. 20, will continue to show a sharp rise, Yang said, after the asset purchases from its parent transformed it into a shipbuilder.
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