Companies

Container-ship demand to rise on trade boost

By Wing-Gar Cheng (China Daily)
Updated: 2011-01-07 13:54

HONG KONG - China Rongsheng Heavy Industries Group Holdings Ltd, the nation's largest private shipbuilder, expects container-vessel orders to rise this year as world trade rebounds from the global recession.

"Container-ship orders are looking better this year," Chief Financial Officer Sean Wang said in an interview on Thursday in Hong Kong. The company also expects to complete construction of a new dry dock this year to increase capacity, he said.

The pick-up in container-ship demand will offset a slowdown in orders for dry-bulk vessels and tankers following a surge last year, Wang said. The Shanghai-based shipyard's total number of ship orders will likely be roughly the same as last year's tally of about 90, he said.

"The shipbuilding industry enjoyed a boom year in 2010," said Steven Leung, director of institutional sales at UOB-Kay Hian Ltd. "Orders will be more selective" this year, he said.

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Rongsheng may make acquisitions in the United States or Europe to boost its offshore business, Wang said. The company raised HK$14 billion ($1.8 billion) in an initial public offering in November, selling shares for HK$8 apiece.

Rongsheng expects more than half of new orders this year to come from shipping lines in Europe and the rest from the US and Asia, Wang said. The delivery dates for existing orders extend into 2014, he said. New orders in China's shipbuilding industry rose nearly fourfold in November, according to government data.

The company, with yards in eastern China's Jiangsu and Anhui provinces, in November forecast 2010 full-year profit of 1.61 billion yuan ($243 million). Net income was 1.3 billion yuan a year earlier.

Rongsheng's profit may more than double in 2011 to 4.4 billion yuan, Morgan Stanley analysts led by Andy Meng wrote in a note to clients on Wednesday. Rongsheng was rated "overweight" in new coverage at Morgan Stanley. The analysts forecast 2010 net income of 1.81 billion yuan.

Bloomberg News